Russian coal and steel producer Mechel PAO saw profit tumble 74% quarter over quarter to 1.63 billion Russian rubles in the last three months of 2018, weighed down by lower earnings from its mining and steel divisions as well as impairments.
Disposals, impairments and write-offs swelled more than tenfold to 7.89 billion rubles, eating away at quarterly profit, which amounted to 6.30 billion in the third quarter of 2018.
Revenue fell 5% on a quarterly basis to 75.57 billion rubles as sales fell 5% in the mining segment and 11% in the steel segment. Group EBITDA fell 22% to 15.02 billion rubles.
For the full year, Mechel posted a 9% increase in profit to 12.63 billion rubles due to revenue growth and a surge in finance income after completing its debt restructuring. Finance expenses decreased 12%, or 5.6 billion rubles.
CEO Oleg Korzhov said the company's lenders wrote off 17.5 billion rubles of fines and penalties in 2018, reducing debt and boosting profit, despite the ruble's depreciation.
Annual revenue increased 5% to 312.57 billion rubles. EBITDA tightened by 7% year over year to 75.67 billion rubles, which suffered from a decline in the mining segment's sale volumes due to a shortage of rail cars in the second half of 2018.
The shortage of rail cars led several of the division's sites to reduce mining in late 2018 and early 2019 as stocks built up, said the segment's CEO, Pavel Shtark, forecasting higher output in 2019.
In the steel division, an extensive repair program hindered sales, while output was redirected toward high-value-added products, according to divisional CEO Andrey Ponomarev. The segment's annual EBITDA, however, rose 49% to 27.99 billion rubles year over year.
The head of Mechel's power division highlighted that 6% year-over-year revenue growth in his segment was due to an increase in electricity sales on both the wholesale and retail markets, though production costs weighed on EBITDA, which sank 33% year over year to 1.55 billion rubles.
The company's net debt, excluding fines and penalties on overdue amounts, stood at 467.70 billion rubles at the end of 2018, a marginal increase from the previous year.
As of March 20, US$1 was equivalent to 64.34 Russian rubles.