Mechel update its ferroalloys segment result for 2010
| 2010 | 2009 | Change | |
| Revenue | 455,119 | 363,652 | 25.20% |
| Intersegment sales | 173,853 | 67,157 | 158.90% |
| Operating income | 22,958 | -27,586 | 183.20% |
| Net income | -186,256 | -309,922 | 39.90% |
| Adjusted EBITDA | 94,431 | 34,940 | 170.30% |
(In '000 USD)
Ferroalloys segment revenue from external customers in the year 2010 amounted to USD 455.2 million or 4.7% of the consolidated net revenue, an increase of 25.2% compared with the segment's revenue from external customers of USD 363.6 million or 6.3% of the consolidated net revenue, in 2009.
In 2010, the operating income in the ferroalloys segment increased by 183.2% and totaled USD 23.0 million or 3.65% of total segment revenue, versus operating loss of USD 27.6 million or -6.40% of total segment revenue, in 2009. The adjusted EBITDA in the ferroalloys segment in 2010 increased by 170.3% and amounted $94.4 million, compared to segment's adjusted EBITDA of $34.9 million in 2009. The adjusted EBITDA margin of the ferroalloys segment comprised 15.01% in 2010 compared to the adjusted EBITDA margin of 8.11% in 2009. Ferroalloys segment's depreciation, depletion and amortization in 2010 were USD 67.3 million an increase of 38.2% over USD 48.7 million in 2009.
Mr Gennadiy Ovchinnikov CEO of Mechel Ferroalloys Management Company said "The ferroalloys segment completed its last year's performance with improvement in its operational and financial results as compared to 2009. We increased production of almost all types of products, despite the difficulties in chrome ore production which we faced at the beginning of the year. We came out with operating profit and almost tripled adjusted EBITDA. In addition to our enterprises' continuous efforts to optimize costs and increase production efficiency, improved market conditions for the division products following growth of demand for various types of steel significantly helped our results.”
He said that "Our large-scale program for modernization of our production facilities will help maintain positive dynamics in the division performance. Modernization works have already begun at the Bratsk Ferroalloy Plant, where two of the four furnaces will be upgraded this year and two more next year. Preparation works to transfer Bratsk Ferroalloy Plant to its own raw materials base at the Uvatsk quartzite deposit is being successfully held. Once the transfer is completed, all of the segment facilities will be using only their own raw materials. In May 2011 we are due to launch a new constant current furnace at Southern Urals Nickel Plant. These projects will result in significant cost reduction, increase of production volumes and improvement of compliance with environmental standards which will inevitably affect the segment's financial results for the better."
