Mechel PAO’s Chief Executive Officer Oleg Korzhov commented:

 

“The Group’s consolidated revenue in 2021 amounted to 402.1 billion rubles, up by 51% yearon-year. EBITDA was 118.9 billion rubles, demonstrating a 190% growth year-on-year. EBITDA margin was 30%, doubling the EBITDA margin of 2020.

 

“Favorable trends on steel and metallurgical commodity markets was the key driver for the improvement of the Group’s financial results. On average, the prices for our facilities’ steel products went up by 60% year-on-year. Average coking coal concentrate prices doubled.

 

“Despite a correction in coal prices at the end of the year, the factors that determined their dynamics in 2021 have not changed. High demand for coal products and supply constraints persist. As such, prices stabilized at levels lower than October highs, but higher than maximums of the previous years.

 

“Our net debt went down by over 50 billion rubles compared to the last year. Net debt to EBITDA ratio went down to 2.3, which is a record unseen by our company for many years.

 

“Operational results in 2021 went down year-on-year in both our mining and steel segments. This was due to insufficient funding of our facilities in previous years as we needed to service and repay substantial financial obligations. With high price levels in 2021, the Group’s cash flow significantly improved, which enabled us to focus on solving the piled-up problems. Last year we managed to repay 

most of the earlier accumulated liabilities to our contractors and restore the level of inventory stocks necessary for stable operations of our production and sales facilities. We also financed our repair and upgrade program and acquired new equipment.

 

“Last year’s efforts on restoring operational volumes have not yet fully reflected in our operating results. Only our steel division has demonstrated growing pig iron and steel output in the past quarter, outperforming the previous three quarters. This year we expect our operations to reveal quarterly improvement.

 

Revenue

In 2021, the Group’s consolidated revenue amounted to 402.1 billion rubles, up 136.6 billion rubles or 51% year-on-year.

 

EBITDA

Consolidated EBITDA in 2021 was 118.9 billion rubles, which is 77.8 billion or 190% more than in 2020 (41.1 billion rubles) primarily due to gross profit’s 83.2-billion-ruble growth as prices for our mining and steel products went up.

 

Profit

Profit attributable to Mechel PAO’s equity shareholders amounted to 80.6 billion rubles, which is 79.8 billion more than in 2020. Apart from gross profit’s growth, another major impact came from the increase in foreign exchange gains on foreign currency denominated liabilities by 7.9 billion rubles, as compared to loss of 36.4 billion rubles in 2020.

 

Trade working capital

In 2021 the Group’s trade working capital changed by 34.6 billion rubles and amounted to 25.6 billion rubles, which was largely due to accumulating inventories by 20.3 billion rubles due to growing raw materials prices and prices for stockpiled products, as well as the increase in trade receivables by 7.9 billion as prices for our mining and steel products demonstrated substantial growth.

 

Finance costs 

In 2021, the Group’s finance costs went down year-on-year by 1.8 billion rubles or 7%, and the amount of interest paid, including interest paid on lease liabilities, was 19.4 billion rubles, which is 16% less year-on-year (23 billion in 2020) as the Group’s debt leverage went down substantially.

 

Debt leverage

As of December 31, 2021, the Group’s net debt excluding fines and penalties on overdue amounts went down by 50.6 billion rubles as compared to December 31, 2020, and amounted to 275 billion rubles. 

This was due to net loan settlement as well as the ruble’s strengthening against the euro.

The Net Debt to EBITDA ratio improved considerably by the end of 2021 and amounted to 2.3, as compared to 7.9 at the end of 2020.