ANNUAL REPORT 2017

Severstal at a Glance

PAO Severstal (“Severstal”, “the Company”, or “the Group”) is a vertically integrated steel and steel-related mining company with its major assets located in Russia and investments in other regions. The Company was founded in 1955 at the Cherepovets Steel Mill in Russia. Severstal’s strategy is to maximise shareholder value by building a healthy and high-quality business that generates higher than market average earnings throughout the economic cycle. The Company comprises two major operational divisions: Severstal Resources and Severstal Russian Steel.

Severstal Resources

Severstal’s mining assets are a fundamental part of the Company’s vertically integrated business model. Severstal Resources supplies almost all of the iron ore and approximately 60% of the hard coking coal consumed by Severstal’s steel business, while also selling significant volumes to external customers both in Russia and abroad.

Severstal Russian Steel

The Company’s core asset is the Cherepovets Steel mill, one of the lowest cost steel mills in the world, strategically located near to the Company’s mining operations, the Baltic ports and Russia’s industrial heartland. Severstal Russian Steel is a leading Russian steel producer. The division has a broad product portfolio, comprising a majority of high value-added flat steel products and increasing volumes of long products for construction and downstream sales.

Severstal’s share capital structure

Listing and tickers

Moscow Exchange (MICEX) – CHMF GDRs on the London Stock Exchange (LSE) – SVST

Indexes

IndexWeight*
RTS1.38 %
MICEX1.38 %
MSCI Russia1.78 %
FTSE Russia IOB2.10 %
Russian Depositary Index1.54 %
Bloomberg World Iron/Steel Index2.64 %
* as at 11 December 2017 

Credit ratings

 Standard&Poor'sMoody'sFitch Ratings
PAO Severstal Credit Rating/OutlookBBB-/StableBaa3/PositiveBBB-/Stable
Date of Rating**20 September 201629 January 201820 October 2016
** “Date of Rating” does not reflect subsequent confirmations    

Our key performance indicators remain the same, we will add Total Shareholder Return (TSR) during 2018


*Severstal analysis, quarterly and annual reports. ** Dividend policy: Not less than 50% of the net profit for the reporting period provided that Net debt/EBITDA is below 1.0x. Should the ratio increase to higher than 1.0x, Severstal would return to its previous dividend payout of 25% of net profit. *** The majority of cash out for: Q4 16, Q1 17, Q2 17, Q3 17 dividends paid in 2017, subject to FX.

More of 2017 in Figures & Charts

Operational performance, million tonnes20172016Change, %
Steel products (Consolidated)10.910.72%
Coking coal concentrate3.34.1(20%)
Iron ore pellets11.110.83%
Iron ore concentrate4.34.15%
    

Financial performance

Profitability highlights, million US$

Working capital dynamic and smart CAPEX*, million US$

*Consisting of cash outlays for purchases of property, plant and equipment and intangible assets

Sustainable Free Cash Flow generation, million US$


* consisting of cash outlays for purchases of property, plant and equipment and intangible assets

Clear dividend policy and sustainable returns, RUB


*Q3 2014 dividends include special dividends
**to be approved at AGM

Debt maturity schedule*, million US$


*Debt represents the principal amount of debt. Figures exclude accrued interest and unamortised balance of transaction costs.

Net debt, Net debt/EBITDA, million US$