Mechel update ferroalloys segment result for January to September 2010.
| | Jan-Sep'10 | Jan-Sep'09 | Change |
| Revenue | 330,675 | 250,111 | 32.20% |
| Intersegment sales | 124,815 | 40,512 | 208.10% |
| Operating income | 907 | -19,169 | 104.70% |
| Net income | -119,828 | -241,601 | 50.40% |
| Adjusted EBITDA | 52,426 | 26,803 | 95.60% |
In ‘000 USD
Ferroalloy segment revenue from external customers in the nine months of 2010 amounted to USD 330.7 million, or 4.7% of the consolidated net revenue, an increase of 32.2% compared with segment revenue from external customers of USD 250.1 million or 6.2% of the consolidated net revenue in the nine months of 2009.
In the nine months of 2010 the operating income in the ferroalloy segment increased by 104.7% and totaled USD 907,000 or 0.2% of total segment’s revenue, versus operating loss of USD 19.2 million or -6.6% of total segment’s revenue in the nine months of 2009. The adjusted EBITDA in the ferroalloy segment in the nine months of 2010 increased by 95.6% and amounted USD 52.4 million, compared to segment’s adjusted EBITDA of USD 26.8 million in the nine months of 2009. The adjusted EBITDA margin of the ferroalloy segment comprised 11.51% in the nine months of 2010 compared to the adjusted EBITDA margin of 9.22% in the nine months of 2009. Ferroalloy segment’s depreciation, depletion and amortization in the nine months of 2010 was USD 47.9 million an increase of 16.8% over USD 41.0 million in the nine months of 2009.
Mr Gennadiy Ovchinnikov CEO of Mechel Ferroalloys Management Company said “The ferroalloys segment’s financial results substantially improved compared with the same period a year ago. Moreover, during the reported period the segment performed well from the operational point of view. From quarter to quarter we have been increasing the volumes of ferronickel production, maintaining the levels of ferrosilicon production. We also managed to overcome geological difficulties at Voskhod chromites mine. At the moment we are moving towards recovery in chrome ore production to the planned levels and hence increase of ferrochrome output. Growth in chrome ore production volumes have already contributed to the decrease in the cash cost of the product.
The capital expenditure program, which we are implementing, will lead to the further growth of the segment’s performance. We are planning to launch a number of new and modernized units at our facilities next year. In particular, in 2011 we are planning to modernize two out of four existing arc furnaces at Bratsk Ferroalloy Plant. We are preparing to launch a new experimental smelting complex designed on the basis of the most modern technologies at Southern Urals Nickel Plant. Should the equipment tests be successful we may take a decision to revamp the whole processing chain of the plant. Modernization of the segment’s production facilities will allow us to decrease costs, enhance production volumes and improve financial performance of the segment.”
