Portrait of the Group

We are already a bigger company than many people know

We have 100,000+ employees, produced over 17.5 million tonnes of steel last year and increased revenues by 22.5% to US$15,245m.

Severstal is an international, vertically-integrated metals and mining company that sells high-quality metal and mining products to customers all over the world

In 2007, we became the world’s 15th largest steel producer. We are a full production cycle company comprising ore mining enterprises, steel mills and rolled product plants as well as downstream production businesses. Our production facilities are geographically diversified, with locations in Russia, the United States, Italy, France, Great Britain, Ukraine and elsewhere.

Following a corporate restructuring in April 2008, our company is made up of three divisions: Severstal Russian Steel, Severstal Resources and Severstal International. Severstal Russian Steel division includes Russian Steel, Izhora Pipe Mill, and Metalware. Resources comprises Severstal’s assets relating to iron ore, coal and gold mining. International includes North America operations and Lucchini.

Key production and financial figures

In 2007, Severstal reported record revenues of US$15,245 million, 22.5% more than in 2006. The volume of crude steel production remained at the same level – 17.5 million tonnes. EBITDA was US$3,680 million, 24.5% more than in the previous year. This strong performance was due to favourable market conditions and growing demand for our products in Russia and internationally as well as management efforts to improve efficiency and control costs. EBITDA margin grew from 23.8% to 24.1%.

Russian Steel remained the most important business by share of total revenue, which grew from 45.4% in 2006 to 46.4% in 2007. Izhora Pipe Plant contributed 3.2% to the company’s total revenues, or US$551 million. Metalware’s share remained almost unchanged, while its sales grew by US$173 million. Mining’s share of consolidated revenues increased to 12.8% in 2007 compared with 10.7% a year earlier. Severstal North America contributed 9.8% to total revenues in 2007, a decrease from 13.5% in 2006. This is due to lower sales during the planned repair of the C blast furnace, which took place in the third quarter. The share of Lucchini was 21.9% in 2007, while in 2006 it was 24.2%.

Russian Steel also remained the most profitable segment of the company. In 2007 its EBITDA margin amounted to 31.8%, compared with 31.6% in 2006. In its first year of operations Izhora Pipe Plant also demonstrated a high EBITDA margin of 27.3%, illustrating the effectiveness of our focus on high-valueadded products. Mining’s EBITDA margin was down to 22.8% due to lower production volumes at the Vorkutaugol mines. Lucchini increased its EBITDA margin to 11.1% in 2007 from 10.0% in 2006 following a programme to reduce expenses. Severstal North America’s EBITDA margin fell to 1.2% in 2007 due to weaker market conditions and reduced production due to the aforementioned furnace repair.

In 2007, the principal products we manufactured were hot-rolled strip and plate (24.1%), long products (20.3%), galvanised and other metallic coated sheet (8.6%). In 2007 our sales of long products grew by 34.6%, metalware products by 20.2%, galvanised and other metallic coated sheet by 18.3% and semi-finished products by 17.3%.