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6 March 2015

Severstal Distribution Increased EBITDA by 1.5 Times and Tripled Operating Cash Flow in 2014.

Despite the decline in metal prices, Severstal Distribution Group (distribution network of the Severstal Russian Steel Division) maintained its revenue at 2013 level, increased EBITDA to $ 37 million and increased operating cash flow to $ 47 million in 2015.

A 6% increase in sales volume (versus 2013 level) allowed retaining revenue at the level of $ 819 million.
Earnings before interest expenses, taxes, depreciation and amortization (EBITDA) increased by 46% to $ 37 million ($ 26 million in 2013) and operating cash flow grew almost three times up to $ 47 million ($ 17 million in 2013).

Meanwhile, EBITDA of AO Severstal Distribution (previously known as ZAO Trade House Severstal-Invest) increased more than twice in 2014 ($ 22 million) versus 2013 ($ 9 million). Operating cash flow (OCF) increased by 40% to $ 46 million during the reporting period ($ 33 million in 2013). 

EBITDA of the European company Severstal Distribution (which previously included AO Severstallat and OOO Severstallat Silesia) amounted to $ 11 million in 2014 under pressure of decline in metal price in Europe. Nevertheless, the company significantly increased its operating cash flow (OCF): a year before the reporting period, it was negative ($ 18.7 million in 2013); while at the end of 2014 it reached $ 0.6 million.

The basis for improved consolidated results of Severstal Distribution Group in 2014 was a new network of branch and trade offices and closer cooperation with the Sevestal Russian Steel Division aimed at improving customer satisfaction. 

Andrey Alexeev, head of Severstal Distribution Group, explained: “Last year we created a network of service warehouses in centers of consumption and trade offices in regions. This system allows the customers to use unique services provided by Severstal and its distribution network. Our proposal includes various steel products and related services from processing in metal center and delivery to financial solutions. In close cooperation with marketing and sales directorate, main production and other services of Severstal we develop best offers for customers and various industries adapted to their business”. 

Also, in 2014 Severstal Distributon Group continued to work on business processes optimization which allowed a 17% reduction of general and administrative expenses (G & A) per tonne of product sold compared to 2013. As a part of internal efficiency improvement, the company simplified organization structure and implemented a system of functional management.

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Distibution network of the Severstal Russian Steel Division includes metal sales companies of PAO Severstal located in five countries. By 2015, these companies, previously known as Trade House Severstal-Invest (Russia), Severstallat (Latvia), Severstallat Silesia (Poland), Severstalbel (Belorussia) and Severstal-Ukraine were renamed into Severstal Distribution. Sales volume of Severstal Distribution Group in 2014 amounted to 1.23 million tones.

Severstal Russian Steel - Division of PAO "Severstal" - one of leading steel producers in Russia. In 2014, Division produced 11.3 million tonnes of steel; sales of steel products amounted to 10.6 million tones. Revenue of Division in 2014 amounted to $ 7,492,000, EBITDA amounted to $ 1,634,000. Companies of the Division are among the world’s most efficient steel producers. www.severstal.ru

PАО Severstal is one of the world’s leading vertically integrated steel and steel related mining companies, with assets in Russia, the Ukraine, Latvia, Poland, Italy and Liberia. Severstal is listed on RTS and MICEX and the company’s GDRs are traded on the LSE. Severstal reported revenue of $ 8,296 million and EBITDA of $ 2,203 million in 2014. Severstal’s crude steel production in 2014 reached 11.3 million tonnes.