A 60% drop in coking coal production and a sagging exchange rate for the Ruble plunged Russian integrated mining and steel company Mechel (MTL-N) into the red during the first quarter.
Coking coal production contracted 63% in the three months ended Mar. 31 from the fourth quarter of 2008, while coal production dropped 40%. Iron ore concentrate production fell 14% in the same period.
“The beginning of 2009 was a difficult period for the company,” Mechel’s chief executive, Igor Zyuyin, said in a statement. “It required significant efforts to adapt Mechel to the drastically falling world economy and keep production from being idled.”
As of Mar. 31, the company held total debt of US$5.8 billion. Cash and equivalents amounted to US$953.3 million.
Mechel posted a consolidated net loss of US$690.7 million, an increase of 39% over its loss of US$496.9 million in the fourth quarter of last year.
Net revenues fell by 13.9% to US$1.2 billion compared with US$1.4 billion in the fourth quarter of 2008.
Operating incomes however surged 105.5% to US$13.8 billion or 1.2% of net revenue, compared with an operating loss of US$251.3 million, or -18.3% of net revenue, in the fourth quarter of 2008.
In the mining segment, decreasing coking coal production resulted in temporary increases in production costs. Because of decreased demand-especially in the domestic market-Mechel concentrated on finding new customers and signed a number of large scale and long-term contracts with Chinese, Japanese and South Korea companies.
At midday in New York, Mechel was trading down 5.4% or 41¢ per share at US$7.12 per share.
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