Saturday , May 28 2022

Severstal will announce an updated strategy during Investor Day 2018



PAO Severstal, one of the world's leading vertically integrated steel and mining companies, today holds the annual Investors Day in London. During the event, the senior management will announce the company's updated strategy, which aims to further increase its financial results and create maximum value and return on investment to shareholders.

On the threshold of the meeting, PAO Severstal leaves the following information to market participants:

  • Severstal is the world leader in the field of efficiency, showing the world's highest EBITDA margin among steel companies, which generates positive free cash flow throughout the cycle and achieving set goals.
  • In order to ensure further growth of indicators, the company has updated its proven efficiency strategy, retaining its core benefits, but adding new elements. The company's new vision is to become a leader in future metallurgy and the company's first choice for customers, employees and partners.
  • In order to achieve this, we have identified new strategic priorities for ourselves, helping us distinguish our competitors, namely excellent customer experience, cost leadership and new opportunities. These strategic priorities will be implemented based on the company's unique corporate culture.

Within the priority of "excellent customer experience" we intend to offer our customers unique offers in all of our target markets.

As part of the prioritization of "cost management", our goal is to achieve a significant cost advantage in terms of the production of basic products compared with the competitors. Part of our "smart kapex" will focus on achieving this goal, including investments in increasing the volume of raw materials production and iron and steel production, which leads to further cost reductions.

As part of the strategic priority "New Opportunities", our task is to access and successfully use advanced technology and new business models that are featured on the market.

The introduction of this set of initiatives will enable us to achieve the previously announced financial objective – to increase EBITDA by 10-15% annually over the next five years (excluding price / macro factors).

The company's financial strategy will be implemented according to the previously announced objectives:

  1. In 2012 – 2018 the company's investment program amounted to approximately $ 800 million on average. As previously announced, we are launching a program for renewal of the first redistribution capacity, which will require significant investments. By 2019, our investment program will be about $ 1.4 billion, a significant part of these are development projects (~ 75%). The cost of retaining existing capacity will remain at $ 358 million in 2019. By 2022, when our key projects will be implemented, the investment program will gradually be normalized to 900 million, and by 2023 it will decrease to about 750 million. Severstal will continue to follow "smart kapex", which means that IRR (return on investment) for all of our projects will exceed 20%. Important investment projects, effects on EBITDA and IRR for each of them will be presented in a presentation by the company's CFO.
  2. The company's dividend policy will remain unchanged. However, in order to maximize investor value creation, Severstal will use the so-called "normalized free cash flow" indicator during the period of the intensive phase of the investment program to calculate dividends. This means that investments exceeding the base level of previous years to $ 800 million will be excluded from the calculation of the dividend base.
  3. We strive to maintain a comfortable debt burden on the company: The net debt to EBITDA ratio will not exceed the previously announced target of 1.5x.

"As a world leader in efficiency, we continually improve our performance through the company's development history, looking for new growth points and seeing great opportunities for ourselves. We have developed a growth strategy with very clear growth points and a financial goal – adding 10-15% to EBITDA annually . At the same time, we strive to adhere to a cautious investment strategy and we expect that the temporary growth of our capital will not affect the company's "distribution history" which, together with promising development projects, will enable us to create additional value for our shareholders "Severstal Company Alexander Shevelev.

The live broadcast of the presentation, during which a team of senior leaders in Severstal will comment on the above statements in more detail, begins at. 12:00 GMT (15:00 Moscow time) and will be available at the company's website / eng / ir / cmd /

This publication of PJSC Severstal contains some forward-looking statements regarding the company's production operations and its expected results, economic indicators, financial status, projects and development prospects. Anything that is not a complement at the time of publication of this information concerns claims about the future. The word "may", "will", "expect", "estimate", "plan", "predict", "assume", "continue", "strive", "consider" and other words or expressions similar to them or negative (positive) form sets forth the prediction of the statement made on the basis of assumptions and estimates that the company considers reasonable when disclosing the information. These forward-looking statements about the future are associated with uncertainty, assumptions and inherent risks, both public and private. There is a possibility that assumptions, intentions and other forward looking statements can not be realized. The company warns that actual results may differ from prospects, which only apply at the time of this annual report. The company does not accept and does not guarantee that the results of the operations expressed in the forward-looking statements will be achieved, therefore they should not be considered as most likely


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