April 5, 2018 / 10:58 AM / a year ago

UPDATE 1-Mining group Mechel's fourth-quarter profit down 72 pct

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MOSCOW, April 5 (Reuters) - Russian metals and mining group Mechel said on Thursday its net profit for the fourth quarter of 2017 plummeted 72 percent compared to the same period the previous year.

Mechel, controlled by businessman Igor Zyuzin, reported a net profit of 443 million roubles ($7.7 million) in the fourth quarter of 2017, down from 1.6 billion roubles in the fourth quarter of 2016.

Mechel, which has been in talks with its lenders over the past couple of years, said in December said it had won enough creditor backing to restructure a $1 billion loan.

Its fourth-quarter 2017 profits were down 93 percent compared to the previous three months of that year. Mechel did not explain why its net profit had fallen both year-on-year and quarter-on-quarter.

“Net income undermined by a 6.1 billion rouble impairment of goodwill and other non-current assets,” Russian brokerage Aton said in a note, without elaborating further. Mechel is due to hold a conference call later on Thursday.

Mechel shares underperformed the market, falling more than 2 percent compared with a 0.5 percent in the benchmark stock market index MOEX.

For 2017 as a whole, Mechel made 11.56 billion roubles in net profit, a 62 percent increase from 2016, it said.

“High coal prices greatly supported our mining division’s results. The steel division last year had to work in a more difficult environment, but by the end of the year the situation stabilised and the division attained good results,” Mechel chief executive Oleg Korzhov said in a statement.

Looking ahead, the company said it planned to increase capital investment in 2018 after increasing spending by more than 25 percent to 11 billion roubles in 2017. ($1 = 57.5950 roubles) (Reporting by Andrey Ostroukh and Diana Asonova Editing by Katya Golubkova and Jane Merriman)

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