During the first six months of 2014 (the “period”), the Distribution Network
of Severstal’s Russian Steel Division, increased EBITDA by 9% year on year to
USD 19 mln (H1 2013: USD 11 mln) driven by increased sales volumes and higher
revenue.
During the first six months of 2014, the Distribution Network of the Severstal
Russian Steel Division, comprising marketing units spread across five
countries, increased revenue from sales of steel products to USD 418 mln,
representing a 9.2% increase was against H1 2013 revenue of USD 383 mln. Sales
volumes for the period also increased by 9% to 617 thousand tonnes (from 530
thousand tonnes in the first half of 2013).
During the period the Distribution Network witnessed various pricing dynamics
across its key markets. The price of a hot rolled coil in Europe reduced by 9%
from H1 2013 while the domestic prices in rubles of hot rolled material in
Russia increased by 4%, and export prices in USD terms reduced by 3-4%.
Andrey Alexeyev, CEO of the Distribution Network, commented: “The Distribution
Network operates in five countries in the EU and CIS, providing steel for
customers across various industries and sectors of 15 countreis. Our companies
provide metal working services and sell products with high added value. This
strategic focus allowed us to increase sales volume and revenue, even with in
an overall softer pricing environment.”
The Distribution Network increased EBITDA by 76% to USD 19.3 mln (H1 2013: USD
11.0 mln). This result was driven by increased sales volumes in combination
with reduced costs and enhanced efficiency through efforts to optimize the
organizational structures of regional branches.
The Severstallat Group, the Distribution Network’s operations in European Union
markets increased revenue by 25% to USD 169 mln and increased EBITDA by 29% to
USD 8.7 mln.
During the reporting period, the revenue of ZAO Trade House Severstal-Invest, a
Russian business within the Distribution Network, increased by 2% year on year
to USD 207 mln, while EBITDA almost tripled year on year to reach USD 9.8
mln.
Andrey Alexeyev commented: “A primary focus is on improving customer service
and developing attractive offers for them. More than 11% of steel products
produced by the Severstal Russian Steel Division are being sold through the
Distribution Network. Our goal is to provide efficient delivery of our
shipments and therefore cost control is a key priority”.
During the period the Distribution Network reduced selling, general and
administrative (SG&A) expenses by 21% versus the first half of the previous
year. In the same period, the business delivered an increase in average monthly
sales per employee by 69%.
