Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Strategy > Strategic priorities: increased focus on free cash flow generation
 

Strategic priorities: increased focus on free cash flow generation

Our goal remains the same: to be a leader in value creation. Severstal’s strategy is aimed at building a healthy and sustainable business for the long term, with our priority being to enhance the company’s efficiency, not its size. In the current volatile and challenging market environment, the Company has increased its strategic focus on generating solid free cash flow (FCF) throughout the market cycle.

Over the past year we have made significant progress to support this focus, with more to come. We are focused on delivering improvements to our efficiency; decreasing our cost of production; making sales more efficient; making our capex “smarter”, and further developing our Business System initiatives. Together these will help further improve our FCF profile.

We have also expanded our list of financial targets and made them more demanding. In addition to our existing KPIs that target an EBITDA margin of 20 per cent, a net debt/EBITDA ratio of around 1.5 times and 25 per cent of net income paid as dividends, we have added the following KPIs: positive FCF generation, a medium-term capex target of around US$1bln per year, and further imrovements to the position of all our assets on the cost curve.

CEO statement

Our strategic goal remains the same: we aim to be a leader in value creation. In the current volatile and challenging market environment, this means the ability to generate solid positive free cash flow throughout the market cycle.

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Chairman statement

Since listing we have been committed to the highest standards of corporate Governance and aim for full compliance with the UK Corporate Governance Code.

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COO statement

We have three simple operational priorities: to have low-cost production across all of our operations at all times; to increase our share of high-margin products; and to ensure that all our assets have low CAPEX requirements.

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CFO statement

Reflecting the confidence in the outlook and the financial strength of the company, the Board of Directors has recommended a dividend payment of 3.83 roubles per share and per GDR (approximately US$0.11) for the 12 months ended 31 December 2013.

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