Mechel is not able even to service its its debt
The recently published report of Mechel’s H1 results has confirmed that the company is not able to maintain and settle its debts. The company keeps making a loss and the funds generated are not enough to even settle the interest on its loans. Analysts say only political support saves Mechel from going bankrupt.
Mechel of I. Zyuzin (holds 67.42%) couldn’t overcome its losses on the results of Q2, is said in the published yesterday report under US GAAP. The net loss in April-June fell to $63 mln against $585 mln a quarter earlier, the corrected loss - $37 mln against $474 mln respectively. In H1 Mechel made $648 mln of net loss, that is by almost 3.3 times less than within the same period in 2013 (over $2.1 bln) but the corrected loss rose from $391 mln to $511 mln. Mechel reminded that in H1 2013 the loss appeared due to large write-offs. The growth of the corrected loss in Jan-June 2014 is explained by the fall in prices for its products.
Mechel’s revenue in H1 fell 26% to $3.4 bln, EBITA – by 38% to $250 mln. The company explains the revenue fall by the sale of the Romanian assets and fall of sales of products of the “third parties” (plants that were in the structure of Estar group). The price fall for coal and iron ore had a negative impact on EBITDA. Mechel’s net debt on the results of H1 is $8.65 bln ($9.1 bln as of the end of 2013). By mid October it fell to $8.1 bln taking into account financial leasing ($400 mln), Mechel’s Vice-President for finance, A. Slivchenko said. The largest creditors are Gazprombank($2.3 bln), VTB ($1.8 bln) and Sberbank ($1.3 bln).
