1Q 2020 RESULTS PRESENTATION · 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,

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


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


EBITDA, RUB Bln

Steel segment

8

Revenue breakdown by regions (1Q 2020)


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


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


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%


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


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


4Q 2019


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


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


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


1Q 2020


1Q 2020


4Q 2019


4Q 2019

Steel segment


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




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Documents

1Q 2020 RESULTS PRESENTATION · 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,