Severstal will announce an updated strategy between the investors' day 2018



PAO Severstal, one of the world's leading vertically integrated steel and mining companies, today has London's annual investor day. During the event, management will announce an updated strategy of the company, which aims to further increase its financial results and create the highest value and return on investments for shareholders.

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

  • Severstal remains the world's leading producer of energy efficiency in terms of efficiency, reflecting the world's highest EBITDA margin among steel manufacturing companies that create a positive free cash flow throughout the cycle and achieve the set goals;
  • In order to provide additional growth in indicators, the company has updated its proven efficiency strategy while retaining its core strengths, but adds new elements. The company's new vision is to become the leader of future metallurgy and the company's first choice for customers, employees and partners.
  • In order to achieve this, we have defined new strategic priorities for ourselves, which will help us to differentiate ourselves from our competitors, namely, excellent customer experience, cost leadership and new opportunities. These strategic priorities will be implemented on the basis of a unique corporate culture of the company.

As part of the "Excellent Customer Experience" priority, we intend to offer our customers unique offers on all our target markets.

Within the framework of the priority of "cost management", our goal is to achieve a significant cost advantage in terms of production of basic products compared to competitors. Part of our "smart cape" will be aimed at achieving this goal, including investments in increasing the volume of raw materials production, as well as the production of iron and steel, which will lead to a further reduction in costs.

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

The introduction of this set of initiatives will enable us to achieve the already announced financial goal – to increase EBITDA by 10-15% annually over the next five years (without price / macro factors).

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

  1. In 2012 – 2018 the company's investment program was on average about 800 million dollars. As we have already announced, we are launching a program to restore the first redeployment capabilities, which will require significant investments. In 2019, our investment program will be around USD 1.4 billion, of which an important share of development projects (~ 75%). The cost of maintaining existing capacity will still amount to $ 358 million in 2019. After 2022, the investment program will gradually normalize to 900 million, and by 2023 it will decrease to around 750 million. Severstal will continue to adhere to the "smart cape", which means that the IRR (return on investment) for all of our projects should exceed 20%. Key investment projects, effects on EBITDA and IRR for each of them will be presented by the company's financial director.
  2. The company's dividend policy will remain unchanged. However, in order to achieve the greatest possible value for investors during the period of the intensive phase of the investment program, Severstal will use the so-called indicator of "normalized free cash flow" for the calculation of dividends. This means that investments exceeding the "base" level of previous years of USD 800 million will be excluded from the calculation of the dividend basis.
  3. Our goal is to maintain a comfortable debt burden on the company: the ratio between net debt and EBITDA will not exceed the previously announced 1.5x target.

"As the world's leading producer of efficiency and continuous improvement of results in the history of company development, today we are looking for new growth points and look at great opportunities for ourselves. We have developed a growth strategy with very clear growth points and financial goals – adding 10-15% EBITDA annually. we will strive to take into account the prudent approach to investment and we expect that the temporary growth of our capital will not affect the history of dividends of the company that will, together with promising development projects, enable us to create additional value for our shareholders. "Severstal Company Alexander Shevelev.

The live broadcast of the presentation, in which the group of top leaders of the Severstal will comment in more detail on the above statements, will begin at 12:00 o'clock after 3 pm Moscow time and will be available on the company's website at / eng / ir / cmd /

This disclosure of the PJSC Severstal contains some forward-looking statements on the company's production activities and expected results, economic indicators, financial status, projects and development prospects. Anything that is not condemned at the time of publication of these data applies to statements about the future. The words "can", "be", "expect", "evaluate", "plan", "predict", "presume", "continue", "strive", "weigh" and other words or expressions, the forms show the predictive nature of the statement based on assumptions and estimates that the company considers reasonable at the time of disclosure. These forward-looking statements on the future are linked to uncertainties, assumptions and inherent risks, both general and private. There is a possibility that assumptions, intentions, and other predictive statements may not materialize. The company notes that actual results may differ from forecast statements that apply only during the annual report. The company does not approve and does not guarantee that the results of the activities expressed in the forward-looking statements will be achieved and should not be considered as the most likely


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