Wednesday , October 27 2021

Severstal will announce an updated strategy during Investor's Day 2018



PAO Severstal, one of the world's leading vertically integrated steel and mining companies, is today organizing the annual Investor Day in London. During the event, the top management will announce an updated strategy of the company, aimed at further increasing financial results, as well as creating maximum value and return on investment for shareholders.

On the day before the PAO meeting, Severstal provides market participants with the following information:

  • Severstal remains the world leader in terms of performance, demonstrating the world's highest EBITDA margin among steel-producing companies, generating positive free cash flow throughout the cycle and achieving its goals;
  • To ensure an additional increase in indicators, the company updated its proven strategy of effectiveness, retaining its basic advantages, but adding new elements. The new vision of the company is to become the leader of the future steel industry and the first choice company for customers, employees and partners.
  • To achieve this, we have identified new strategic priorities that will help us differentiate ourselves from our competitors, namely, excellent customer experience, cost leadership and new opportunities. These strategic priorities will be implemented based on the unique corporate culture of the company.

As part of the "excellent customer experience" priority, we intend to offer our clients exceptional offers in all our target markets.

As part of the "cost leadership" priority, our goal is to achieve a significant cost advantage in the production of basic products compared to the competition. Part of our "smart envelope" will aim to achieve this goal, including investments in increasing raw material extraction as well as iron and steel production, which will lead to further cost reduction.

As part of the strategic priority "new opportunities", our task is to access and effectively use advanced technologies and new business models that appear on the market.

The introduction of this set of initiatives will allow us to achieve the previously announced financial goal – an increase in EBITDA by 10-15% per annum in the next five years (excluding price / macro factors).

The company's financial strategy will be implemented in accordance with previously announced goals:

  1. In 2012 – 2018 The company's investment program was on average 800 million dollars. As previously announced, we're launching a first redistributable renewal program that will require significant investment. In 2019, our investment program will amount to approximately USD 1.4 billion, of which a significant number are development projects (~ 75%). The cost of maintaining existing power will remain at $ 358 million in 2019. After 2022, when our key projects are implemented, the investment program will gradually normalize to 900 million, and by 2023 it will fall to around 750 million. Severstal will continue to adhere to the "smart capex", which means that the IRR (return on investment) of our projects should exceed 20%. Key investment projects, impact on EBITDA as well as IRR for each of them will be presented in the presentation of the company's financial director.
  2. The dividend policy of the company will remain unchanged. However, in order to maximize the creation of value for investors, during the intensive phase of the investment program, Severstal will use the so-called Indicator of normalized cash flows to calculate dividends. This means that investments exceeding the "base" level from previous years at the level of USD 800 million will be excluded from the calculation of the dividend payment base.
  3. Our goal is to maintain a comfortable debt of the company: the ratio of net debt to EBITDA will not exceed the previously announced 1.5x target.

"As a global leader in performance and constantly improving our results throughout the company's development history, we are looking for new growth opportunities today and we see great opportunities." 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 will strive to follow a prudent approach to investment and expect that the temporary increase in our capital will not affect the "dividend history" of the company, which together with promising development projects will create additional value for our shareholders. "Severstal Alexander Shevelev.

The live broadcast of the presentation, during which the top team of Severstal managers will comment on the above statements in more detail, will start at 12:00 GMT (15:00 Moscow time) and will be available on the company's website at http: //www.severstal .com / eng / ir / cmd /

The present disclosure of PJSC Severstal contains some forward-looking statements about the company's production activities and its expected results, economic ratios, financial situation, projects and development prospects. Everything that is not a fact made at the time of publication of this information concerns statements regarding the future. The words "may", "will", "expect", "estimate", "plan", "anticipate", "set", "continue", "aim", "consider" and other words or phrases similar to them or Forms negative (positive) indicate the predictive character of the statement based on assumptions and estimates that the company considers justified at the time of publication of the disclosure. These forward-looking statements about the future are associated with uncertainty, assumptions and inherent risks, both general and private. It is possible that assumptions, intentions and other statements regarding the future may not be implemented. The company warns that actual results may differ from forward-looking statements that apply only when this annual report is prepared. The company does not approve and does not guarantee that the results of actions expressed in forward-looking statements will be achieved, and therefore they should not be considered the most likely.


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