Mechel: Power Segment Output For The 1Q 2011

The operating income in the power segment in 1Q 2011 amounted to $33.5 million, or 9.10% of the total segment‘s revenue in the same period, an increase of 59.8% compared to the operating income of $21.0 million, or 7.05% of the total segment‘s revenue, in 1Q 2010. The adjusted EBITDA in the power segment in 1Q 2011 went up by 63.8% totaling $35.4 million, compared to the adjusted EBITDA of $21.6 million in 1Q 2010. The adjusted EBITDA margin for the power segment amounted to 9.61% compared to 7.26% in 1Q 2010. Depreciation and amortization in power segment in 1Q 2011 increased by 28.70% comparing with the 1Q 2010 from $4.43 million to $5.70 million.
Sergey Zorin, Chief Executive Officer of Mechel Energo, noted: "In Q1 2011 the power segment noticeably improved its financial performance as compared to the previous quarter. Revenue increased more than by 25%, adjusted EBITDA – by 65%, while net income more than doubled. This growth is largely due to the increase in average electricity tariffs and consolidation in the Company‘s performance the results of Toplofikatsia Rousse, as Mechel increased its stake in the power station‘s charter capital up to 100%. Expansion of the power segment‘s operation as well as implementing measures aimed at optimizing costs, allow us to expect that the positive dynamics of segment‘s performance will be maintained."