Русский
Severstal met the challenges of 2009 decisively and effectively
We were early to reduce costs and put in place other initiatives to manage our business during the downturn. Consequently, we were able to contain the impact of a [50]% fall in global demand for steel on 2009 performance. We were also successful in generating significant cash through the year and have further strengthened our financing structure. As a result, the Company has emerged from this challenging period stronger than ever and is well positioned to exploit global economic recovery as it gathers pace.
The steel industry showed signs of stabilisation in the second half of the year after reaching the bottom of the cycle in the first half. We have seen tentative recovery in pricing and demand in some of our key markets, particularly in Russia and the US. Although we remain cautious about the outlook for 2010, these trends are encouraging.
As a result we are increasing our capital expenditure into 2010. This is focused on enhancing our vertically model and ability to target growth in the Russian infrastructure and construction markets and on improving our competitive position in higher value added markets in the US. As part of our plan to step up production, we [have] re-started some of our idled facilities in the US. Over the longer term we remain confident in our ability to achieve industry leading returns given our integrated model, low cost Russian production, lean international operations and diverse emerging markets sales channels.
Throughout 2009 we continued to focus on developing our people and processes to ensure that we are industry leaders in health and safety, customer care, efficiency and teamwork. The introduction of our ‘Mission, Vision and Values’ programme across all our operations was an important strategic initiative designed to deliver leadership across these areas and will continue to be a priority.
Severstal remains committed to the highest standards of corporate governance. The Board is well balanced between executive and non-executive Directors, who challenge the executive team and scrutinise the implementation of our development plans. The executive management team are enthusiastic about using the Board’s wide experience to the benefit of the Company. During the year, Alexei Kulichenko became Chief Financial Officer in [July], joining the Board in [October]. Sergei Kuznetsov, who was previously Chief Financial Officer of the Company, became Chief Executive Officer of our International Division.
Severstal rose to the challenges of a difficult 2009. I would like to thank the Board, the executive team and all my colleagues across the Group for their loyalty and commitment over this period, as well as our suppliers and customers for their continuing support. Solid economic growth in emerging markets and a gradual recovery of demand in mature markets have improved the outlook for 2010. Combined with the benefits of the cost management and debt reduction initiatives implemented during 2009, we believe we are well positioned to benefit from improving steel markets in 2010 and to invest in growth and an enhanced product mix.
Christopher Clark
Independent Chairman of the Board of Directors
