Wednesday , June 16 2021

Severstal announces an updated strategy during the investor's day 2018


PAO Severstal, one of the world's leading vertically integrated steel and mining companies, today owns an investor day in London. During the event, the senior management must announce the updated strategy of the company, which aims to further increase its financial performance and to create the highest value for investors and return on investment.

On the eve of the meeting PAO Severstal offers the following information to market participants:

  • Severstal continues to be the industry's leading provider of efficiency, showing the world's largest EBIT margin among steel mills, generating positive cash flow throughout the cycle and achieving the targets set;
  • To ensure further growth in the indicators, the company has updated its proven effectiveness strategy while retaining its core benefits but added new elements. The company's new vision is the leading company in the future of metallurgy, which is the first choice for customers, employees and partners.
  • To accomplish this, we have identified new strategic priorities that will help us differentiate our competitors, from the excellent customer experience, cost leadership, and new opportunities. These strategic priorities are implemented on the basis of the company's unique corporate culture.

As a "top customer experience", we want to offer our customers unique offers in all areas of interest.

As part of our cost leadership priority, our goal is to achieve a significant cost advantage in the production of basic products compared to competitors. Part of "intelligent crackers" is geared towards achieving this goal, including investments in increasing raw material extraction and iron and steel production, leading to further cost reduction.

As part of our strategic priorities for "new opportunities", our mission is to use and use successfully advanced technologies and emerging new business models.

The adoption of these initiatives will enable us to reach the previously announced financial target – to increase EBITDA by 10-15% annually over the next five years (excluding price and macro-workers).

The company's financial strategy is implemented in accordance with previously announced targets:

  1. 2012 – 2018 The company's investment program averaged around $ 800 million. As previously announced, we are launching a program for redesigning capacity, which requires significant investment. In 2019, the investment program is about $ 1.4 billion, of which a major part is development projects (~ 75%). The maintenance costs of the current capacity will remain at $ 358 million in 2019. By 2022, after major projects are implemented, the investment program will gradually become 900 million and by 2023 it will fall to around 750 million. Severstal continues to adhere to the "smart capsule", which means that the IRR for our projects should exceed 20%. The key investment projects, the impact on EBITDA and the IRR for each are presented in the company's CFO.
  2. The Company's dividend policy remains unchanged. In order to maximize value creation of investments, Severstal uses a so-called "normalized free cash flow" indicator for the calculation of dividends during the intensive phase of the investment program. This means that investments that go beyond the baseline score of $ 800 million in previous years are left out of the calculation of the dividend.
  3. We strive to maintain the company's comfortable gearing ratio: the ratio between net debt and EBITDA does not exceed the previously stated 1.5x target.

"We are the world leader in efficiency and continually improving our performance throughout the company's development history, looking for new growth targets and seeing significant opportunities for ourselves, we have developed a growth strategy that has very clear growth targets and an economic goal – to increase 10-15% of EBITDA annually. investment and we expect that the temporary increase in capital will not affect the company's "dividend history" which together with promising development projects gives us the opportunity to create added value for our shareholders, Severstal Company Alexander Shevelev.

The live broadcast of the show, during which Severstal's senior management team commented on the aforementioned statements, starts at 12.00 (15.00 Moscow time) and is available on the company's website at / eng / ir / cmd /

The announcement of PJSC Severstal has certain forward-looking statements about the company's production activities and its expected results, financial indicators, financial situation, projects and development prospects. Everything that has not happened during the publication of this information concerns future statements. The words "can", "come", "wait," "evaluate," "plan," "predict," "assume," "continue," "seek," "consider," and similar words or phrases or negative ) form the proactive nature of the statement based on assumptions and estimates that the company considers reasonable at the time of publication. These forward-looking statements relate to both general and private uncertainties, assumptions and internal risks. It is possible that assumptions, intentions, and other statements about the future may not take place. The company warns that actual results may deviate from forward-looking statements that are valid only in the context of this annual report. The company does not accept or warrant that the results of the activities outlined in future perspectives will be achieved and should therefore not be considered as most likely


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