New sales system at Severstal Russian Steel’s Distribution Network boosts sales by 16% in H1 2014

During the first six months of 2014 (the “period”), the Distribution Network of Severstal’s Russian Steel Division, increased sales of steel products by 617 thousand tonnes, or 16%, against the prior year. The Distribution Network comprises Trade House Severstal-Invest, Severstallat, Severstallat Silesia, Severstalbel and Severstal-Ukraine. In January and February, the Distribution Network delivered more than 11% of the Severstal Russian Steel Division’s total steel product sales .

Andrey Alekseev, Head of the Severstal Russian Steel Division’s Distribution Network, said: “This strong increase in sales was driven by service improvements and changes we have implemented to enhance customer service. We are creating a wide network of large well-stocked warehouses and remote offices. This system allows us to broaden the range of products, build efficient logistics chains and to maintain efficient communication with our regional sales representatives. With our new systems, we have been able able to boost sales and reduce costs, thereby increasing EBITDA in the period by more than one and a half times against the prior year.” 

In 2013, the Distribution Network opened its office in Finland. This year, a further ten offices were opened in Russia with more in the pipeline.

ZAO Trade House Severstal-Invest, part of the Distribution Network, reported a 9% year on year increase in sales to 320 thousand tonnes. The volume of deliveries to Central and North-West districts of Russia reached 208 thousand tonnes, which is a 9% increase versus corresponding period of the previous year. During the same period, the sales volume in Central Black Earth and Volga Regions increased by 14% to 104 thousand tonnes.

In the first six months of the year, AO Severstallat and its subsidiary Severstallat Silesia, which together represent the Distribution Network’s operations in European Union markets, boosted sales by 32% to 234 thousand tonnes. In January and February, the companies increased supply volumes to Eastern Europe and Scandinavia. In the first half of 2014, 93 thousand tonnes were sold to Poland, Czech Republic and Hungary and volumes to Finland and Sweden reached 33 thousand tonnes. The most substantial increase in sales volumes was recorded in the German market, where 20 thousand tonnes of steel products were delivered, which is double what was sold to that market in the previous year. 

Volumes to Ukraine and Republic of Belarus during the reporting period increased 6% year on year to 63 thousand tonnes.

The distribution Network continues to develop [metal working]. During the period, output increased 12% year on year to 122 thousand tonnes. In European Union countries, the Distribution Network produces welded structural and water-and-gas pipes, belts, blanks and plates. SMC in Russia provides services including the coiling and cutting of bars, slitting and cross cutting of rolled steel and produces profiled sheeting and expanded steel sheets.

During the period, the share of products produced by OAO Severstal’s operations in the Distribution Network’s sales portfolio of increased 6 ppts to 98%.