1Q 2020 RESULTS PRESENTATION
May 26, 2020
www.mechel.com
This presentation does not constitute or form part of and should
not be construed as, an offer to sell or issue or the solicitation of
an offer to buy or acquire securities of Mechel PAO (Mechel) or
any of its subsidiaries in any jurisdiction or an inducement to enter
into investment activity. No part of this presentation, nor the fact of
its distribution, should form the basis of, or be relied on in
connection with, any contract or commitment or investment
decision whatsoever. Any purchase of securities should be made
solely on the basis of information Mechel files from time to time
with the U.S. Securities and Exchange Commission. No
representation, warranty or undertaking, express or implied, is
made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or the
opinions contained herein. None of the Mechel or any of its
affiliates, advisors or representatives shall have any liability
whatsoever (in negligence or otherwise) for any loss howsoever
arising from any use of this presentation or its contents or
otherwise arising in connection with the presentation.
This presentation may contain projections or other forward-looking
statements regarding future events or the future financial
performance of Mechel, as defined in the safe harbour provisions
of the U.S. Private Securities Litigation Reform Act of 1995. We
wish to caution you that these statements are only predictions and
that actual events or results may differ materially. We do not intend
to update these statements. We refer you to the documents
Mechel files from time to time with the U.S. Securities and
Exchange Commission, including our Form 20-F. These
documents contain and identify important factors, including those
contained in the section captioned “Risk Factors” and “Cautionary
Note Regarding Forward-Looking Statements” in our Form 20-F,
that could cause the actual results to differ materially from those
contained in our projections or forward-looking statements,
including, among others, the achievement of anticipated levels of
profitability, growth, cost and synergy of our recent acquisitions,
the impact of competitive pricing, the ability to obtain necessary
regulatory approvals and licenses, the impact of developments in
the Russian economic, political and legal environment, volatility in
stock markets or in the price of our shares or ADRs, financial risk
management and the impact of general business and global
economic conditions.
The information and opinions contained in this document are
provided as at the date of this presentation and are subject to
change without notice
Disclaimer
2www.mechel.com1Q 2020 RESULTS PRESENTATION
KEY FINANCIAL RESULTS
Nelli R. Galeeva – Chief Financial Officer
www.mechel.com3 1Q 2020 RESULTS PRESENTATION
Key market drivers
Starting January 2020 Chinese ports resumed processing of imported coal. There
were concerns in February that COVID-19 outbreak in China could result in met coal
demand decrease that would bring pressure upon prices. But in February-March
exporters managed to raise prices amid coal export to China ban in Mongolia and
production and transportation difficulties of local Chinese coal producers. By mid-
March, coking coal prices reached the highest level since July 2019 -$164/t FOB
Australia. Average spot price of Premium LV HCC in 1Q2020 amounted to $155/t
which was 11% higher than 4Q2019 average level.
In 2Q 2020 after resuming of coal supplies to China from Mongolia, enforcing a
quarantine in India and amid expectations of coal consumption decrease due to
suspension of blast furnace operations by some steel producers coal prices started
to decline and by end of April fell below $120/t FOB Australia. In May prices are still
under pressure and their repair may be expected when steel demand recovery
starts.
Russian coal market was declining in the beginning of the year following the
international coal prices downward trend in 4Q2019 and due to coal surplus in
Russia. In January coal prices went down by 9% compared to 4Q2019 with some
further decline in February-March. In April-May local prices for coking coal remained
relatively stable.
With COVID-19 outbreak there were concerns regarding possible iron ore demand
decline but state support of economy in China together with fast localization of
epidemic helped to maintain stable iron ore demand. Supplies also were not
affected so iron ore prices remained relatively flat through 1Q2020 and in April-May.
In the first half of 1Q2020 billet market demonstrated negative dynamics. Billet price
gradually decreased from $408 to $380 FOB by the mid-February on imported scrap
prices decline in Turkey and weak billet demand in MENA countries. In the second
half of February demand and prices in MENA region slightly improved but in March
business activity curtailed again. Additional pressure on steel consumption came
from oil prices drop.
At the same time scrap deficit on both domestic and international markets amid
pandemic outbreak together with high semi-finished steel demand in China and
South-East Asia in 2Q2020 may support billet prices in mid-term.
Billet FOB Black Sea, US$/t
Source: Metal Courier
HCC prices FOB Australia, US$/t
Source: Bloomberg
* Current situation
www.mechel.com1Q 2020 RESULTS PRESENTATION / KEY MARKET DRIVERS4
200
250
300
350
400
450
500
550
Jan-1
7
Apr-
17
Jul-1
7
Oct-
17
Jan-1
8
Apr-
18
Jul-1
8
Oct-
18
Jan-1
9
Apr-
19
Jul-1
9
Oct-
19
Jan-2
0
Apr-
20
285
194
170
192
237
197
188
212 210 208178
142
147
135*
0
50
100
150
200
250
300
350
Jan-1
7
Ma
r-1
7
Ma
y-1
7
Jul-1
7
Sep-1
7
No
v-1
7
Jan-1
8
Ma
r-1
8
Ma
y-1
8
Jul-1
8
Sep-1
8
No
v-1
8
Jan-1
9
Ma
r-1
9
Ma
y-1
9
Jul-1
9
Sep-1
9
No
v-1
9
Jan-2
0
Ma
r-2
0
Ma
y-2
0
HCC spot price (NAMC0031 PLDP Index) HCC quarterly benchmark price
HCC quarterly reference price HCC spot price (HCCAM1 SSYF Index)
TSI Premium Hard (PHCC)
Consolidated Revenue in 1Q2020 amounted to 68.3 bln RUB, a
decrease of 9% compared to 1Q2019. This was to a greater
extent a result of significant coal prices decline (especially met
coal prices) in 1Q2020 compared to 1Q2019. Consolidated
Revenue was flat compared to 4Q2019.
1Q2020 EBITDA* went down by 17% compared to 1Q2019 but
went up by 36% compared to 4Q2019 and amounted to 12.7 bln
RUB with EBITDA margin 19%.
Loss attributable to equity shareholders of Mechel PAO in
1Q2020 amounted to 36.9 bln RUB, compared to loss amounted
to 9.8 bln RUB in 4Q2019 due to growth of foreign exchange loss
related to foreign currency-denominated part of our credit portfolio
as a result of significant ruble devaluation against US dollar and
euro in the reporting period.
www.mechel.com
RUB mln 1Q’ 20 1Q’ 19 % 1Q’ 20 4Q’ 19 %
Revenue 68,332 74,856 -9% 68,332 68,376 0%
Operating profit 7,016 10,837 -35% 7,016 2,560 174%
EBITDA* 12,690 15,322 -17% 12,690 9,361 36%
EBITDA margin, % 19% 20% 19% 14%
(Loss) / profit
attributable to equity
shareholders
of Mechel PAO
(36,878) 11,336 -425% (36,878) (9,765) 278%
1Q 2020 Financial results summary
5
*Here and further EBITDA is calculated as Adjusted EBITDA in accordance with definition in Press
release Attachment A
1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
In 1Q2020 coal mining volumes decreased by 4% compared to 4Q2019.
1Q2020 coal mining volumes grew by 47% compared to 1Q2019 as a
result of measures implemented to recover production volumes at our
mining sites.
Pig iron and steel production increased by 10% and 2% respectively Q-on-
Q after blast furnace #4 and converter #1 at Chelyabinsk Metallurgical
Plant were put into operation in March after reconstruction.
Coking coal sales to third parties in 1Q2020 increased by 5% compared to
4Q2019. Overall sales volumes declined by 8% Q-on-Q as internal coking
coal demand was lower during blast furnace #4 repair.
Other met coal (PCI and anthracites) sales remained flat Q-on-Q. Steam
coal sales grew in 1Q2020 by 3% Q-on-Q.
Flat products sales increased by 11% Q-on-Q. At the same time stainless
flat products sales increased 38% as a result of efforts to increase sales of
higher value-added products.
Long products sales added 5% Q-on-Q. Sales of high value-added
products such as rails increased by 34%.
www.mechel.com
Production (th tonnes)
Sales (th tonnes)
Product 1Q’ 20 1Q’ 19 % 1Q’ 20 4Q’ 19 %
Run-of-mine
Coal5,188 3,520 +47 5,188 5,420 -4
Pig Iron 872 870 0 872 796 +10
Steel 876 930 -6 876 860 +2
Product 1Q’ 20 1Q’ 19 % 1Q’ 20 4Q’ 19 %
Coking Coal 1,684 1,697 -1 1,684 1,830 -8
Steam Coal 1,212 1,333 -9 1,212 1,174 +3
Flat Products 124 115 +7 124 112 +11
Long Products 648 606 +7 648 618 +5
1Q 2020 Production and sales summary
6 1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
5.96.5
0.4
1.9
-0.7-0.4
-0.6
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
EBITDA4Q2019
Prices External salesvolumes
Inter-segmentsales
Cost of sales Other EBITDA1Q2020
Mining segment regional sales structure changed as we increased sales of
coking coal to Japan and redirected some volumes of steam coal from China
and Vietnam to Russian domestic market. As a result share of China
decreased from 17% in 4Q2019 to 9% in 1Q2020, share of Russia increased
from 22% to 27% and share of Asia (w/o China) increased by 1%.
Metallurgical coal market weakness was the major factor of Mining segment.
Revenue declined by 9% compared to 4Q2019 and by 26% compared to 1Q
2019.
Mining segment EBITDA in 1Q2020 went up by 9% compared to 4Q2019 as
a result of cost of sales 12% decline Q-on-Q, and amounted to 6.5 bln RUB.
www.mechel.com
Revenue, EBITDA margin, RUB Bln
24.5 25.3 23.4 19.8 18.1
9.5 10.310.0
8.08.3
32% 33% 32%
21% 24%
0%
20%
40%
60%
80%
0,0
20,0
40,0
1Q19 2Q19 3Q19 4Q19 1Q20
Inter-segment revenue Revenue EBITDA margin
Revenue breakdown by regions (1Q 2020)EBITDA, RUB Bln
Mining segment
7 1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
Asia w/o China41%
Russia27%
China9%
Europe15%
CIS2%
Middle East6%
2.3
4.5
2.7
0.2 1.0
-0.6
-1.1
0,0
1,0
2,0
3,0
4,0
5,0
6,0
EBITDA4Q2019
Prices External salesvolumes
Inter-segmentsales
Cost of sales Other EBITDA1Q2020
www.mechel.com
Revenue, EBITDA margin, RUB Bln
42.1 46.8 45.5 40.6 42.1
1.61.4 1.3
1.7 2.0
7%9%
7%5%
10%
0%
10%
20%
30%
0,0
10,0
20,0
30,0
40,0
50,0
1Q19 2Q19 3Q19 4Q19 1Q20
Inter-segment revenue Revenue EBITDA margin
EBITDA, RUB Bln
Steel segment
8
Revenue breakdown by regions (1Q 2020)
1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
In 1Q2020 Revenue increased by 4% compared to 4Q2019 due to growth
of sales of rails, flat steel, especially stainless flat products, and wire.
Revenue in 1Q2020 compared to 1Q2019 was flat.
EBITDA in 1Q2020 went up by 101% compared to 4Q2019 on higher
sales volumes of steel products and costs reduction.
Segment`s EBITDA margin grew Q-on-Q from 5% to 10%.
Russia72%
Europe15%
CIS12%
Asia1%
19.8
66,7 66,5 68,1
18.1
40.6 42.1
8.0
-1.7 1.5 0.1
8.1
Revenue4Q2019
MiningSegment
SteelSegment
PowerSegment
Revenue1Q2020
Power Steel Mining
Consolidated revenue and segment EBITDA dynamics
Mining segment Revenue to 3rd parties in 1Q2020 decreased by 9%compared to 4Q2019 on lower coal prices.
Steel segment Revenue to 3rd parties in 1Q2020 grew by 4% compared to4Q2019 due to increased sales of rails, flat products, including stainless flat,and wire.
Power segment Revenue to 3rd parties remained relatively flat in 1Q2020compared to 4Q2019.
Mining segment EBITDA went up by 9% in 1Q2020 compared to 4Q2019 andamounted to 6.5 bln RUB due to lower costs as a result of decreasedvolumes of blasting and stripping works.
Steel segment EBITDA increased by 101% and amounted to 4.5 bln RUBinfluenced by the growth of sales volumes of steel products and costsreduction.
Power segment EBITDA grew by 37% in 1Q2020 Q-on-Q and amounted 921mln RUB.
www.mechel.com
Revenue, RUB Bln
Segment EBITDA, RUB Bln
9 1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
5.9
8,9 9,511,7
6.5
2.3
4.50.7
0.6 2.2
0.2
0.9
EBITDA4Q2019
MiningSegment
SteelSegment
PowerSegment
EBITDA1Q2020
Power Steel Mining
Cash flow & trade working capital
Cash flow from operations completely covers Group's current expenses,
including debt service and lease payments and allows us to perform debt
repayments.
As of March 31, 2020, trade working capital was negative at -8.4 bln RUB. It
declined by 3.4 bln RUB from -5.0 bln RUB as of December 31, 2019,
predominantly as a result of customers advance payments growth.
Group’s capital expenditures in 1Q2020 amounted to 2.6 bln RUB, including
0.5 bln RUB of lease payment.
www.mechel.com
CASH FLOW, RUB Bln
FREE CASH FLOW for 1Q 2020, RUB BlnTrade working capital management, RUB Bln
71.3 70.0 66.7 62.272.5
(61.4) (63.4) (63.3) (67.2)
(80.9)
9.9 6.6 3.4(5.0)
(8.4)
31.03.2019 30.06.2019 30.09.2019 31.12.2019 31.03.2020
Trade current assets Trade current liabilities Trade working capital
10
2.94.7
16.0
0.6
-1.9
-12.9
Cash net ofoverdrafts asof 31.12.2019
Net Operatingactivities
Net Investingactivities
Net Financingactivities
Effect ofexchange rate
changes
Cash net ofoverdrafts asof 31.03.2020
16.0
7.3
1.2
-6.6
-2.1
-6.1
Cash flow fromOperations
Net interestexpenses, incl
overdue interestand capitalized
Capitalexpenditures
(excluding lease)
Free Cash Flow Net Settelment ofloan,lease and
other obligations
Free Cash Flow toFirm
1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
Debt structure & net debt / EBITDA ratio dynamics
www.mechel.com
11.0
6.65.3 5.6 5.7 6.4 6.9 7.5
8.4
0,0
5,0
10,0
15,0
20,0
25,0
30,0
0
100 000
200 000
300 000
400 000
500 000
600 000
FY'15 FY'16 FY'17 FY'18 1Q'19 1H'19 9M'19 FY'19 1Q'20
Lease and other financial liabilitiesLong-term borrowingsInterest payableShort-term borrowings and current portion of long-term borrowingsNet Debt*/EBITDA
RUB
487 blnRUB
433 bln
* excluding GPB option on Elga, fines and penalties
11
RUB
426 blnRUB
423 bln
Russian state-controlled
Banks86%
ECA 11%
Bonds2%
Other1%
Restructured loans89%
In restructuring11%
RUB56%
USD12%
EUR32%
1Q 2020 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
RUB
411 blnRUB
411 blnRUB
408 blnRUB
400 bln
RUB
427 bln
As at 31.03.2020:
Ruble portion of debt amounted to 61%; and Russian state-controlled banks
held 90% of our debt portfolio.
Net leverage increased to 8.4 on debt growth by 27 bln RUB (as a result of
significant ruble devaluation against US dollar and euro in 1Q 2020) and lower
EBITDA.
Average interest rate through the debt portfolio was 7.0% per annum; average
paid interest rate amounts to 6.8% per annum.
In 1Q2020 Group repaid 5.7 bln RUB of debt principal.
As at May 2020:
Portion of restructured debt is at a level of 89%; ruble portion of debt
amounts to 56%; and Russian state-controlled banks hold 86% of our debt
portfolio.
Average interest rate through the debt portfolio is 6.4% per annum; average
paid interest rate amounts to 6.3% per annum.
APPENDIX
www.mechel.com12 1Q 2020 RESULTS PRESENTATION
3,1
19
3,1
01
1,8
02*
2,9
26
3,1
35
2,3
10
1,5
98*
2,7
36
2,5
00
2,3
64
1,2
78
*
2,1
56
2,3
25
3,0
86
1,9
15*
2,7
82
2,2
55
2,7
93
1,6
33*
3,0
31
Coal SKCC Coal YU Coal Elga* Iron ore
1Q19 2Q19 3Q19 4Q19 1Q20
1,3
84
1,3
31
1,2
06
1,7
78
1,6
19 43%
20%
11%
10%
16%
4Q2019 1Q2020
Other
Depreciation andamortisation
Energy
Staff costs
Raw materials and goodsfor resale
38%
23%
14%
10%
15%
www.mechel.com
Cash costs, RUB/tonne COS structure
Average sales prices FCA, RUB/tonneRevenue, EBITDA margin, RUB Bln
Mining segment
24.5 25.3 23.4 19.8 18.1
9.5 10.310.0
8.08.3
32% 33% 32%
21% 24%
0%
50%
100%
0,0
10,0
20,0
30,0
40,0
1Q19 2Q19 3Q19 4Q19 1Q20
Inter-segment revenue Revenue EBITDA margin
14,7
35
7,7
77
5,5
60
1,6
60
4,8
68
15,0
42
7,5
21
5,4
34
1,8
98
8,0
63
13,2
79
6,3
08
4,5
65
1,3
01
9,2
921
1,7
08
4,9
04
3,7
02
1,2
82
9,2
46
10,7
57
4,6
46
3,6
48 1,6
35
9,1
70
Coke Coking coal Anthracite andPCI
Steam coal Iron ore
1Q19 2Q19 3Q19 4Q19 1Q20
13.4 bln RUB15.3 bln RUB
13
Coking coal concentrate produced on Elga
* Coking coal concentrate produced on Elga and Southern Kuzbass Coal Company washing facilities
1Q 2020 RESULTS PRESENTATION / APPENDIX
www.mechel.com
Revenue breakdown by regions
1Q 2020
Revenue breakdown by products
1Q 2020
Revenue breakdown by products
4Q 2019
Revenue breakdown by regions
4Q 2019
Mining segment
14 1Q 2020 RESULTS PRESENTATION / APPENDIX
Coking coal34%
Anthracites and PCI
24%
Steam coal 9%
Middlings7%
Coke17%
Coking products
4%
Other4%
Iron ore1%
Asia w/o China40%
Russia22%
China17%
Europe13%
CIS1%
Middle East7%
RUB
19.8
bln
Coking coal38%
Anthracites and PCI
26%
Steam coal 10%
Middlings6%
Coke15%
Coking products
3%
Other2%
Asia w/o China41%
Russia27%
China9%
Europe15%
CIS2%
Middle East6%
RUB
18.1
bln
74%
11%
11%3%
1%
4Q19 1Q20
Other
Depreciation
Energy
Staff costs
Raw materials andpurchased goods
68%
12%
13%
4%3%
www.mechel.com
Cash costs, RUB/tonneCOS structure
Average sales prices FCA, RUB/tonneRevenue, EBITDA margin, RUB Bln
Steel segment
42.1
46.8 45.5
40.6 42.1
1.6
1.4 1.3
1.7 2.0
7%9%
7%5%
10%
0%
10%
20%
30%
0,0
20,0
40,0
1Q19 2Q19 3Q19 4Q19 1Q20
Inter-segment revenue Revenue EBITDA margin
25,8
25
24,3
94
25,3
17
31,3
43
44,6
01
55,1
33
26,6
21
24,8
67
25,8
44
32,0
84 40,2
78
52,2
57
26,8
70
25,0
95
25,8
06 33,8
69
35,2
10
51,5
39
24,2
07
22,0
41
23,2
29 30,5
18
32,3
24
50,0
06
22,7
70
21,6
41
21,9
72
28,4
73
28,9
10
53,4
81
Billets Wire rod Rebar Carbon flat Railway rails Ferrosilicon
1Q19 2Q19 3Q19 4Q19 1Q20
36.2 bln RUB36.9 bln RUB
15
31,3
10
47,2
55
44,3
56
36,9
90
42,3
03
78,5
45
33,2
85 4
8,0
32
45,2
27
40,9
68
44,8
98
72,0
76
34,1
46 4
8,0
87
44,1
99
40,7
57
45,7
60
63,6
75
28,9
34
46,7
41
42,2
89
41,8
46
43,1
03
64,0
54
29,1
08
45,2
54
41,9
44
42,6
90
43,1
34
61,6
84
Rebar Hardware Carbon flat Railway rails Structuralshapes
Ferrosilicon
1Q19 2Q19 3Q19 4Q19 1Q20
1Q 2020 RESULTS PRESENTATION / APPENDIX
www.mechel.com
Revenue breakdown by regions
1Q 2020
Revenue breakdown by products
1Q 2020
Revenue breakdown by products
4Q 2019
Revenue breakdown by regions
4Q 2019
Steel segment
16 1Q 2020 RESULTS PRESENTATION / APPENDIX
Rebar23%
Carbon long products
14%
Hardware15%
Forgings and stampings
8%
Carbon flat11%
Stainless flat2%
Ferrosilicon2%
Railway rails9%
Structural shapes8%
Other8%
Russia74%
Europe14%
CIS11%
Asia1%
RUB
40.6
bln
Rebar22%
Carbon long products
14%
Hardware14%
Forgings and stampings
9%
Carbon flat12%
Stainless flat3%
Ferrosilicon1%
Railway rails12%
Structural shapes8%
Other5%
Russia72%
Europe15%
CIS12%
Asia1%
RUB
42.1
bln
www.mechel.com
Average electricity sales prices and cash costs, RUB/ th KWh COS structure
Revenue, EBITDA margin, RUB Bln Power segment Revenue in 1Q2020 remained relatively stable compared to
the same period last year and to 4Q2019.
Power segment EBITDA grew by 37% in 1Q2020 Q-on-Q and amounted921 mln RUB.
Power segment
94%
4%
1%
1%
4Q19 1Q20
Other
Depreciation
Staff costs
Raw materials and goodsfor resale including energy
93%
4%
1%
2%
1,009 1,047 1,015889 1,001
2,4792,348
2,495 2,557 2,628
1Q19 2Q19 3Q19 4Q19 1Q20
Cash costs Sales price
8.2 6.5 6.0 8.0 8.1
4.4
3.73.3
4.2 4.3
2%0%
6%5%
7%
-10%
0%
10%
20%
30%
40%
0,0
2,0
4,0
6,0
8,0
10,0
12,0
1Q19 2Q19 3Q19 4Q19 1Q20
Inter-segment revenue Revenue EBITDA margin
7.5 bln RUB8.2 bln RUB
17 1Q 2020 RESULTS PRESENTATION / APPENDIX
Mechel is a global mining and metals company
www.mechel.com