OAO Mechel, Russia’s largest producer of steelmaking coal by capacity, said fourth-quarter profit tripled from the previous three months after revaluing the cost of buying assets from Bluestone Coal Corp.
Net income rose to $414 million from $132 million, Moscow- based Mechel said on its Web site today. The result included a $433 million gain from the Bluestone reappraisal, Chief Financial Officer Stanislav Ploschenko told a conference call today. Sales increased 9 percent to $1.72 billion.
“Without this one-off item, Mechel would’ve posted a loss,” said Dmitry Smolin, an analyst at Uralsib Financial Corp. in Moscow. “Their operating income fell 15 percent.”
Mechel bought Bluestone in the U.S. last year for $1.45 billion, including $436 million in cash, 83 million in preferred stock and a “contingent” payment related to the value of the shares. An independent appraisal of the shares led the company to recognize gains in earnings, Ploschenko said. Net operating income in the quarter fell to $131 million, from $155 million.
The company’s American depository receipts fell 2.2 percent to $28.20 by 1:10 p.m. in New York trading.
Mechel plans to produce 30 million metric tons of coal this year, including 17 million to 18 million tons of steelmaking coal, Senior Vice President Vladimir Polin said today on the call. The figure exceeds the record volumes of 2008 and will be almost 70 percent higher than last year, Polin said.
The company which had total debt of $6 billion as of December 31, plans to invest $2.1 billion in coal mining by 2012, he said. Another $1.4 billion will be spent on expanding Mechel’s steel business, including slabs and rails production.
The company will regain pre-slump levels of capacity usage in May, said Boris Nikishichev, Mechel mining chief. It “should finally overcome the crisis,” he said in the statement.