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Mechel Profit Falls 29% on Weak Coal; Result Beats Estimates

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June 20 (Bloomberg) -- OAO Mechel, Russia’s biggest miner of steelmaking coal, said first-quarter profit fell 29 percent as coal prices dropped and mines were halted for safety checks.

Net income declined to $218 million from $309 million a year earlier, Mechel said today in a statement. That beat the $125 million median estimate of five analysts surveyed by Bloomberg. Sales rose 0.5 percent to $2.95 billion.

Coal prices have retreated as China’s growth slows, eroding demand in the world’s biggest user of the steelmaking material. Coal India Ltd., the largest producer, reported a 5 percent decline in profit last month. Moscow-based Mechel also suspended production at two sites in December amid safety concerns.

Mechel dropped as much as 2.4 percent in Moscow trading, the biggest intraday decline in a week. The stock was down 1.9 percent at 204.60 rubles as of 12:16 p.m. local time.

The company is studying asset disposals as it seeks to reduce debt, which totaled $9.6 billion at the end of March.

Earnings before interest, taxes, depreciation and amortization were $463 million in the first quarter, exceeding the $458 million analyst estimate. Losses at the ferroalloys division widened to $56 million.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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