3 Min Read
* Q1 net profit at 13.9 bln rbls, up from 312 mln yr ago
* Earnings supported by higher coking coal prices - CEO
* Company has fought back after struggling with debts (Adds details)
MOSCOW, May 31 (Reuters) - Russian metals and mining group Mechel said on Wednesday its net profit jumped to 13.9 billion roubles ($245 million) in the first quarter on the back of higher prices for its products.
Mechel, which borrowed heavily before Russia's economic crisis took hold in 2014, has fought back from the brink of bankruptcy after struggling to keep up debt repayments as demand for its products weakened alongside tumbling coal and steel prices.
The company, controlled by businessman Igor Zyuzin, reported a net profit of just 312 million roubles in the first quarter of last year.
But higher coking coal prices and a recovery in the Russian economy have since supported earnings and Mechel said in April it could start reducing debt this year if favourable market conditions continued.
"In the first quarter of 2017 the group showed good financial results. Favourable price trends had their positive impact," Chief Executive Oleg Korzhov said in a statement.
"Our net profit attributable to equity shareholders of Mechel for the first quarter went up by nearly nine times, reaching 13.9 billion roubles."
Mechel's net debt, excluding fines and penalties on overdue amounts, totalled 458.9 billion roubles as of March 31, down from 469.2 billion roubles at the end of last year.
Revenue increased 24 percent year-on-year to 77.4 billion roubles, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 22.8 billion roubles, up from 10 billion roubles a year ago.
Speaking on a conference call with analysts, Korzhov said the company had asked creditors for permission to pay dividends for preferred shares - seen at 20 percent of net profit - for 2016.
"We, the management, have done everything possible from our side. We asked the banks to consider this possibility. The first step is to get the banks' agreement, but we don't yet have that in hand," he said.
Mechel's shares listed on the Moscow exchange were up 6 percent by 1630 GMT at 155 roubles per a share, having hit a high of 167 roubles earlier in the session.
ATON analyst Andrey Lobazov said Mechel's second-quarter earnings would be supported by a spike in coking coal prices following floods in Australia, but warned profits could come under pressure from the stronger rouble in the second half of the year.
Capex is seen at 12.5 billion roubles in 2017, Korzhov said, split almost equally between maintence upkeep and investment projects.
Mechel said earlier on Wednesday its crude steel output increased 8 percent year-on-year in the first quarter to 1.1 million tonnes.
Coal output and sales of coking coal concentrate both fell 10 percent compared with the same period last year, to 5.2 million tonnes and 2 million tonnes respectively, it said.
$1 = 56.7275 roubles Reporting by Jack Stubbs; Editing by Mark Potter and Jane Merriman