"Even though the volume of metallurgical coal sales to third parties in 2020 went up 15% compared to 2019, revenue from contracts with external customers went down by 15%. The same factors led to EBITDA's 34-percent decrease year-on-year. At the same time, average unit costs at our mining facilities in 2020 was lower than in 2019.

"Despite the revisions the new coronavirus pandemic brought into the division's life and operations last year, the division's facilities continued to work as normal, fully complying with all state requirements protecting our staff's health. As a result, coal mining went up 10% year-on-year, mostly due to restored operational volumes at Southern Kuzbass Coal Company.

"We continue to work on restoring operational volumes at our facilities. We work on improving the efficiency of contractors involved in our operations. Yakutugol Holding Company, Southern Kuzbass Coal Company and Korshunov Mining Plant have developed and are now implementing target financing programs aimed at upgrading our washing plants and improving their efficiency. We continue with upgrading our mining transport fleet. The division's coke and chemical facilities implement technical upgrades of their production equipment, paying special attention to the ecological component and decreasing our operations' impact on the environment." 


Mln rubles                             FY 2020 FY 20191 %    4Q' 20 3Q' 20 % 
Revenue 
                                       70 881  83 517   -15% 18 411 17 190 7% 
from contracts with external customers 
Revenue 
                                       34 402  37 710   -9%  9 475  8 232  15% 
inter-segment 
EBITDA                                 26 259  39 669   -34% 6 513  6 406  2% 
EBITDA, margin                         25%     33%           23%    25%

1 These amounts reflect adjustments made in connection with the presentation of the discontinued operation.

Steel Segment

In 4Q2020 revenue from sales to external customers went up by 4% quarter-on-quarter due to higher sales prices for steel products. The fourth quarter was defined by an explosive growth of prices for the construction product range, caused by lack of supply on the market due to China's high demand for steel as well as limited supply due to slow comeback of steelmaking facilities after coronavirus limitations in the first half of 2020. As such, EBITDA in 4Q2020 remained unchanged quarter-on-quarter.

Revenue from sales to third parties in 2020 went down by 5% year-on-year due to a decrease in sales of stampings, particularly railway axles as demand for new railcars decreased as compared to 2019. EBITDA in this reporting period went up 8% year-on-year as the share of high value-added products went up and costs of sales went down.

Mechel Steel Management Company OOO's Chief Executive Officer Andrey Ponomarev noted:

"In 2020, the division demonstrated a 5% decline in revenue from contracts with external customers as compared to 2019. Various factors had an impact on this figure's dynamics. On the one hand, we have increased sales of high value-added products such as rails and sections manufactured by Chelyabinsk Metallurgical Plant's universal rolling mill, as well as flat rolls. As output of high value-added products was on high priority, we somewhat decreased rebar sales. Also, due to weaker consumer needs, sales of stampings and some types of hardware also declined. Nevertheless, the division's overall shipment volumes remained practically unchanged in this reporting period year-on-year. On the other hand, some of the division's products suffered from negative price dynamics. Despite stronger steel prices on the global and domestic markets in late 2020, average prices registered year-on-year growth only for rails, forgings and stampings, as well as wire ropes. The dramatic rise of steel prices in December did not have a major impact on the reporting period's revenue, but will have a positive influence on this year's financial results.

"Despite a lower revenue, EBITDA in 2020 went up 8% as compared to 2019. This was the result of our focusing on output of the most profitable products as well as reducing unit production costs as coking coal prices went down.

"Overall, last year the division demonstrated stable operational results and an ability to adapt its production plans to changing market trends as the coronavirus infection spread. We continue to implement repair programs aimed at expanding our product range, improving product quality and decreasing our operations' impact on the environment." 


Mln rubles                             FY 2020 FY 20191 %   4Q' 20 3Q' 20 % 
Revenue 
                                       166 885 174 850  -5% 43 131 41 354 4% 
from contracts with external customers 
Revenue 
                                       6 626   6 068    9%  1 875  1 299  44% 
inter-segment 
EBITDA                                 13 154  12 170   8%  3 034  3 022  0% 
EBITDA, margin                         8%      7%           7%     7%

1 These amounts reflect adjustments made in connection with the presentation of the discontinued operation.

Power Segment

Mechel-Energo OOO's Chief Executive Officer Denis Graf noted:

"The division's financial results in 4Q2020 improved as expected quarter-on-quarter as the heating season began and the summer campaign of repairs to key generating equipment ended. The 4% decrease in revenue in 2020 as compared to 2019 was due to a decrease in electricity generation as we increased the volume of repairs to our key and supplemental equipment in accordance with our production plans. Also, higher outside temperatures led to a late start for the heating season, which had an impact on heat generation. At the same time, EBITDA went up 67% year-on-year due to the growth of unregulated capacity prices on the wholesale electric power and capacity market, as well as higher retail markup year-on-year and lower production costs." 


Mln rubles                             FY 2020      FY 20191     %   4Q' 20        3Q' 20        % 
Revenue 
                                            27 688       28 786  -4%        7 716         5 879  31% 
from contracts with external customers 
Revenue 
                                            15 769       15 541  1%         4 191         3 569  17% 
inter-segment 
EBITDA                                        2 349        1 409 67%           807           254 218% 
EBITDA, margin                         5%           3%               7%            3%

1 These amounts reflect adjustments made in connection with the presentation of the discontinued operation.

***

Mechel PAO

Alexey Lukashov

Phone: +7 495 221 88 88

alexey.lukashov@mechel.com

***

Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

***

Some of the information in this press release 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. Attachments to the Press Release

Attachment A

Non-IFRS financial measures. This press release includes financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as well as other financial measures referred to as non-IFRS. The non-IFRS financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with IFRS.

Adjusted EBITDA (EBITDA) represents profit (loss) attributable to equity shareholders of Mechel PAO before Depreciation and amortisation, Foreign exchange (gain) loss, net, Finance costs including fines and penalties on overdue loans and borrowings and lease payments, Finance income, Impairment of goodwill and other non-current assets, net, Net result on the disposal of non-current assets, Allowance for expected credit losses on financial assets, Provision (reversal of provision) for doubtful accounts, Write-off of trade and other receivables and payables, net, Change in provision (reversal of provision) for inventories at net realisable value, (Profit) loss after tax for the period from discontinued operations, Net result on the disposal of subsidiaries, Profit (loss) attributable to non-controlling interests, Income tax expense (benefit), Effect of pension obligations, Other fines and penalties and Other one-off items. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our Revenue. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under IFRS and should be considered in addition to, but not as a substitute for the information

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