Russian steel and coking coal producer Mechel posted a $605 million US GAAP net loss for January-June 2012 against a $501 million net profit registered in the same period last year, the company said on Tuesday.
Mechel's half-year performance was below the consensus forecast by RIA Novosti-polled analysts, who expected the mining giant to post a $263 million profit in the reporting period.
“Even though the Group’s divisions operated quite stably in terms of production and distribution, the Group’s financial results were strongly affected, inter alia, by non-recurrent accounting write-offs, resulting from declining market environment, as well as foreign exchange loss,” the statement said.
“However, the company took measures to improve its operational and financial performance by way of cutting production costs and accessing new sales markets, thus achieving positive cash flow in the reporting period.”
The company’s revenue from external customers fell by 5.8 percent to $6.036 billion and its adjusted EBITDA declined by 28 percent to $848.8 million. Experts expected Mechel’s sales to be $5.950 billion and EBITDA to be $887 million.
As of June 30, 2012, Mechel had a total debt of $8.8 billion. Cash and cash equivalents amounted to $150.7 million and net debt amounted to $8.7 billion.
Mechel announced in late September it may sell up to 25 percent of its mining business to a strategic partner in line with the company’s asset restructuring strategy, as it aims to improve the company’s financial performance and increase its shareholder value.