3Q 2012 Financial Results

9M2012 RESULTS PRESENTATION DECEMBER 12, 2012

DISCLAIMER

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 OAO (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 harbor 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

2

FINANCIAL HIGHLIGHTS

58% 60% 61% 63%

32% 30% 29% 29%4% 4% 4% 3%

6% 6% 6% 5%

9M11 9M12 2Q12 3Q12

Steel Mining Ferroalloys Power

SEGMENTS OVERVIEW

REVENUE FROM THIRD PARTIES EBITDA BY SEGMENTS

Consolidated revenue down 12% q-o-q to $2.7 bn

Net income up in Q3 to $55 mn vs net loss in Q2

Steel segment increased its share in the consolidated

revenue to 63% supported by a more stable pricing

environment than in other segments

Mining segment increased its share in the consolidated

EBITDA to 82%

$ Mln

$ Mln

(1) Adjusted EBITDA represents EBTIDA adjusted by forex gain/loss, interest income, net income on the disposal of non-current assets, amount attributable to non-controlling interests gain/loss from remeasurement of

contingent liabilities at fair value, impairment of long-lived assets and goodwill and provision for loan given to related parties, 4

Steel Mining Ferroalloys Power

EBITDA(1) BY SEGMENTS

9,617 8,751 3,086 2,715

153

512

3

-7

17

678

-50

593

-11

3 1,5

536

49

358

-7

28 36

463

91

302

-70,3

-0,6

385

75

305

-3 -7

4,7

375

Steel Mining Ferroalloys Power Cons.adj. Consolidated

3Q11 4Q11 1Q12 2Q12 3Q12

2Q 2012

24%

78%

-2%

3Q 2012

20%

82%

-1% -1%

Segment 3rd party revenue down 12% to $777 mn in Q3

largely driven by decrease in sales of coking coal and

weaker pricing

Despite falling prices segment‟s EBITDA grew $3 mn q-o-q

due to operating costs containment efforts

EBITDA margin of 32% - the highest for the year 2012

Cost control measures result at reduced cash cost across

all Russian operations

MINING SEGMENT


contingent liabilities at fair value, impairment of long-lived assets and goodwill and provision for loan given to related parties,

$ Mln

CASH COSTS, US$/TONNE COS STRUCTURE

$1,748 mn $1,618 mn

5

1 147 1 061933 881 777

251264

226207

172

37%

45%

31%28%

32%

0%

20%

40%

60%

0

400

800

1 200

3Q11 4Q11 1Q12 2Q12 3Q12

Revenues (lhs) Intersegment revenues (lhs) Adj. EBITDA margin (rhs)

REVENUE, EBITDA(1)

39 3341

96

3933

42

113

4236

45

100

4232

45

88

3928

43

89

Coal SKCC Coal YU Iron Ore Bluestone

3Q11 4Q11 1Q12 2Q12 3Q12

49% 52%

19% 20%

8% 8%13% 14%11% 6%

9M11 9M12

Other

Depreciation and depletion

Energy

Staff costs

Raw materials and purchased goods

26% 24% 21% 25%

18%14%

11%16%

13%

10%10%

8%

17% 31%36% 27%

17%13% 13% 18%

4% 4% 4%4%5% 4% 5% 2%

9M11 9M12 2Q12 3Q12

Russia Europe CIS China Asia w/o China Middle East Other

54%47% 46% 43%

16%21% 22%

22%

10%8% 9% 10%

2%2% 2% 2%

5%4% 3% 5%

9%13% 13% 14%

4% 5% 5% 4%

9M11 9M12 2Q12 3Q12

Coking coal Anthracites and PCI Coke Coking products

MINING SEGMENT

6

REVENUE BREAKDOWN BY REGION AVERAGE SALES PRICES FCA, US$/TONNE

Anthracite sales to Europe grew 2-fold, increasing European

share in the revenue to 16%

Sales to premium markets with better pricing - Japan and South

Korea - increased by 8% and 3% respectively

Coking coal sales down 18% partly compensated by a 20%

growth in thermal coal and a 9% growth in iron ore sales

*Restated to include middlings

EXTERNAL SALES STRUCTURE

309

206

98

48

106

291

181

104

43

101

263

142

95

49

82

236

129

96

48

84

229

122

80

4865

Coke Coking coal Anthracite and PCI

Steam coal* Iron ore

3Q11 4Q11 1Q12 2Q12 3Q12

STEEL SEGMENT

7




REVENUE, EBITDA(1)

Segment‟s revenue down 10% as volumes decreased by

13% due to lower sales of flat steel and 3rd party semi-

finished products

Due to higher sales to a stronger domestic market and

reduction of utilization rate at loss-making capacities in

Europe EBITDA held strong q-o-q at $75 mn

Lower raw materials resulted in rebar and billet cash cost

decrease by 4% and 6% respectively

$4,842 mn $4,640 mn

$ Mln

1 796

1 541

1 649

1 8981 700

70

7679

67

508%

-3%

3%

5%4%

-5%

-2%

1%

4%

7%

10%

13%

0

500

1 000

1 500

2 000

3Q11 4Q11 1Q12 2Q12 3Q12


575 575 585545

503 511494 499 515

436 452 470409 431

452

Billets* Wire Rod Rebar

3Q11 4Q11 1Q12 2Q12 3Q12

80% 79%

8% 8%

8% 9%2% 2%2% 2%

9M11 9M12

Other

Depreciation

Energy

Staff costs


*Carbon and low-alloyed billets

52% 55% 53%60%

24% 19% 18%

17%

1% 4% 7%2%

7% 10% 10%12%

11%9% 8% 7%

5% 3% 4% 2%

9M11 9M12 2Q12 3Q12

Russia Europe Asia CIS Middle East Other

STEEL SEGMENT

8





Share of Russia and CIS up to 72% of sales where demand

remained relatively stable vs. Europe whose share

decreased to 17%

Share of semi-finished steel products down from 23% in Q2

to 18% in Q3 due to reduction of production at DEMZ and

lower 3rd party resale operations

Share of high-margin hardware increased to 14% of sales

23% 20% 23% 18%

22% 24% 24%25%

3% 2% 2%2%

16% 16% 14%15%

6% 6% 6% 6%

13% 13% 12% 14%

7% 7% 6% 5%

10% 12% 13% 15%

9M11 9M12 2Q12 3Q12

Semi-finished steel products Rebar Stainless flat products

Carbon long products Forgings and stampings Hardware

Carbon flat Other

637 743

4903

2760

954

822

583 686

4332

2703

919742

550

692

4303

2647

932

734551 692

4195

3082

891

724533

684

4038

2545

884

700

Semi-finished steel products

Rebar Stanless flat products

Forgings and stampings

Hardware Carbon flat

3Q11 4Q11 1Q12 2Q12 3Q12


FERROALLOYS SEGMENT

REVENUE, EBITDA(1)

(1) Adjusted EBITDA represents EBTIDA adjusted by forex gain/loss, interest income, net income on the disposal of non-current assets, amount attributable to non-controlling interests gain/loss from remeasurement of contingent

liabilities at fair value, impairment of long-lived assets and goodwill and provision for loan given to related parties,

Reduction in Ni and Cr production and sales due to negative

margin resulted in revenue down by 31% q-o-q

As costs containment measures some of the smelting

capacity at Southern Urals Nickel Plant and Tikhvin chrome

plant idled

Production adjustments resulted in a 57% reduction of

negative EBITDA to just $3 mn

9

$ Mln

$492 mn $456 mn

104116

125132

91

6016

28 22

232%

-9%

-5% -5%-3%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-40

10

60

110

160

210

3Q11 4Q11 1Q12 2Q12 3Q12


51% 50%

10% 9%

18% 17%

13% 16%

8% 8%

9M11 9M12

Other

Depreciation

Energy

Staff costs


3Q11 4Q11 1Q12 2Q12 3Q12

20.6K

21.4K

19.7K

20.6K

19.1K

Nickel

873

2.15K

912

2.05K

877

2.06K

845

2.11K

848

2.10K

Ferrosilicon Chrome

169 184 172 149 151

Chrome Ore Concentrate

29% 28% 25%36%

57% 53%50%

37%

5% 12%18%

14%

9% 7% 7%13%

9M11 9M12 2Q12 3Q12

Russia Europe Asia Other

FERROALLOYS SEGMENT

10



Sales volumes of FeSi up 39% - mostly to the domestic

market - as modernized capacity ramped up catching the

price upside

With the sales of FeSi up and Ni and Cr down the share of

domestic market grew to 36% of the revenue

3Q11 4Q11 1Q12 2Q12 3Q12

Nickel Ferrosilicon Chrome

1 418

1 340 1 309

1 227

1 299

21 380

18 064 19 126

17 202

15 327 2 269

2 180 2 184

2 218

1 928

53%45% 42%

35%

20%

14%10% 21%

21%

29%35% 26%

4% 11% 12%16%

2% 1% 1% 2%

9M11 9M12 2Q12 3Q12

Nickel Ferrosilicon Chrome Chrome ore Other

POWER SEGMENT

11

AVERAGE ELECTRICITY SALES PRICES AND CASH COSTS (RUSSIA), US$/MWH COS structure

REVENUE, EBITDA(1)

Lowest season for power and heat generation resulted in a

16% q-o-q decrease in sales

Cash costs slightly up as volumes decrease

EBITDA down to negative $7 mn



$ Mln

53,551,5 51,9

54,4 55,7

50,1

33,8

25,8 28,0

30,1

3Q11 4Q11 1Q12 2Q12 3Q12

Sales price Cash costs

88% 88%

3% 3%5% 6%

2% 1%2% 2%

9M11 9M12

Other

Depreciation

Energy

Staff costs


$728 mn $714 mn

164

211 243 175147

113

126

136

113109

-3%1%

7%

0,1%

-3%-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

0

100

200

300

400

3Q11 4Q11 1Q12 2Q12 3Q12

Revenues (lhs) Intersegment revenues(lhs) Adj. EBITDA margin (rhs)

ADDRESSING COSTS – IMPROVING THE MARGINS

12

REVENUE DYNAMICS REVENUE, EBITDA(1) AND NET PROFIT



Consolidated EBITDA down only 3% q-o-q to $375 mn, as falling prices are countered by successful cost control measures

Despite continuing downward trend in prices and volumes cost-cutting measures drive the EBITDA margin up to 14%

Q3 net income positively affected by $127 mn of FX gain totaling $55 mn of net income

3Q2012 FINANCIAL PERFORMANCE Q-O-Q HIGHLIGHTS:

$ Mln $ Mln

3 0862 715

-226-145

0

1 000

2 000

3 000

4 000

2Q2012 Volume Price 3Q2012

32102929 2950 3086

2715

678536 463 385 375

26201 218

-823

55

21%18%

16%

12%

14%

0%

10%

20%

30%

(900)

(400)

100

600

1 100

1 600

2 100

2 600

3 100

3 600

3Q11 4Q11 1Q12 2Q12 3Q12

Revenue (lhs) Adj. EBITDA (lhs) Net profit (lhs) Adj. EBITDA

3 YEAR RECORD OPERATING CASH GENERATION!

13

OPERATING CASH FLOW DYNAMICS NET CASH FLOW

Production adjustment and better inventory management maximized the effect in the Q3, resulting in a record $458 mn cashflow from

operations in Q3

Business generated more cashflow from operations in 9M2012 than in 2009 – 2011 altogether

With Investments of $223 mn and dividends of $195 mn in Q3 the business still generated cash surplus to repay the debt.

$ Mln FY’10 FY’11*

-15

270*

345304

458

(50)

150

350

3Q11 4Q11 1Q12 2Q12 3Q12

Operating cash flow

9M12

(147)

404

1 107

(1 119)

(1 676)

(802)

1 210

2 079

(102)

Operating activities Investment activities Financial activities

* Excluding the effect of loan to Estar * Excluding the effect of loan to Estar

DEBT PROFILE AS AT DECEMBER 1, 2012

Company succeeded in repaying approximately USD 0.55 bln since the beginning of the year (reduction of gross debt excluding

effect of FX changes)

Net debt stable at USD 9.3 bln (including financial lease) as of December 1, 2012

Cash and available credit lines total USD 1,170 mn as of December 1, 2012

STABILIZING DEBT LEVEL DESPITE A CHALLENGING YEAR

FINANCIAL RATIOS

14

$ Mln

612678

536463

416 375

3,5 3,53,9

4,24,4

5,4

4,2 4,24,4

3,3

3,83,3

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

0

200

400

600

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Adj. EBITDA (lhs)

Net Debt / Adj. EBITDA for covenants testing (rhs)Adj. EBITDA/Interest expense, net, per quarter (rhs)

Net Debt / Adj. EBITDA level agreed with creditors

for the end of 2012 (rhs)

Adj. EBITDA / Interest Expense level agreed with

creditors for the end of 2012 (rhs)

RUR 56%

USD 36%

EUR 8%

Other <1%

RUR Bonds

26%

Foreign

Banks

24%

Russian

Banks

50%

141

1 029

Cash and cash equivalents

Available undrawn lines

235 210 3 1

78

1287 2048

1699

578 544

86

483

483

483

482

322

14

148

120 72

44

45

0

500

1000

1500

2000

2500

3000

Renewable working capital and trade finance lines

Repayment of other term loans

Expiration of put options on bonds

Maturity of RUR bonds

Expiration of financial lease

1170

327

2213

2654 2577

1105

588

Significant reduction of short term debt from USD 3.4 bln to USD 2.4 bln since September 1, 2012 (short term portion decreased from 34%

to 26% of total debt)

Major third quarter transactions include:

• Securing RUR 24 bln credit line with Sberbank on October 2012;

• Amendment and restatement of USD 1 bln pre – export syndicated facility on December 4, 2012, granting additional grace period of 12

months and reducing short term portion of debt by approximately USD 0.6 bln;

• Other refinancing and rising new money in the total amount of USD 323 mln since September 1, 2012.

DEBT MATURITY IMPROVEMENT

15

DEBT MATURITY SCHEDULE AFTER PXF’S CHANGES AS OF DECEMBER 1, 2012

$ Mln

Dec, 1,

2012

2012 2013 2014 2015 2016 2017 and

after

422 666

406

1382

1777

1383

434 429

153

40 460

461

460

154

460

307

67

163

127 71

45

46

0

500

1000

1500

2000

2500

3000

Renewable working capital and trade finance lines

Repayment of other term loans

Expiration of put options on bonds

Maturity of RUR bonds

Expiration of financial lease

1517 1202

2711

2364

2222

939

475

DEBT MATURITY SCHEDULE AS AT SEPTEMBER 1, 2012

$ Mln

629

888

Cash and cash equivalents

Available undrawn lines

Sep, 1,

2012

2012 2013 2014 2015 2016 2017 and

after

Revenue 2,715 3,086 -12.0%

Cost of sales (1,985) (2,195) -9.6%

Gross margin 26.9% 28.9%

Operating profit / (loss) 127 (471) -

Operating margin 4.7% -15.3%

Adjusted EBITDA(1) 375 385 -2.6%

Adjusted EBITDA(1) margin 13.8% 12.5%

Net Income / (loss) 55 (823) -

Net Income margin 2.0% -26.7%

Sales volumes(2), „000 tonnes

Mining segment 5,853 5,880 -0.5%

Steel segment 2,072 2,389 -13.3%

FINANCIAL RESULTS OVERVIEW



(2) Includes sales to the external customers only

US$ MILLION UNLESS OTHERWISE STATED 3Q12 2Q12 CHANGE, %

16

3Q 2012 Financial Results

Investor Relations

Transcript of 3Q 2012 Financial Results