The Russian steelmaker Severstal has announced that in 2009 its domestic division Severstal Russian Steel saw a decrease in its revenue to $6.179 billion compared to $12.064 billion in 2008, as a result of lower average prices and sales volumes, particularly in H1.
Accordingly, in 2009, Severstal Russian Steel's export sale volumes increased to 53.1 percent of total sales in 2009 from 39.4 percent of total sales in 2008, while its EBITDA decreased to $1.319 billion in 2009 from $3.675 billion in 2008.
In Q4 2009, Severstal Russian Steel continued its strong performance, with revenue and EBITDA improving significantly quarter on quarter. Its Q4 revenue increased by 13.1 percent in Q4 to $1.954 billion, while its EBITDA increased by 27.9 percent to $555 million. Average sales prices were 16.3 percent higher in Q4 while sales volumes were 1.9 percent lower, both compared to Q3.
In 2009, Severstal Russian Steel's cost per unit of slab production (including depreciation and amortization) decreased by 42.3 percent year on year to $269 due to cost cutting initiatives and depreciation of the ruble. The quarter-on-quarter cost per unit of slab production (including depreciation and amortization) in Q4 was affected by higher raw material prices; thus, it amounted to $296 versus $240 in Q3.
"As part of our capital expenditure program in 2010, we plan to start the construction of a mini-mill in Balakovo (Saratov region). By 2013 this mini-mill is expected to produce 1 million mt of long steel per year and will support organic growth in the Russian Steel division. Downstream expansion in Russia, including investments in production of fabricated box sections at Sheksna and in the second polymer coating line at Cherepovets, is aimed at increasing the share of customized products in our portfolio mix," reads Severstal's statement.
In 2010, Severstal expects in a further measured recovery in the oil & gas and construction sectors in Russia. Automotive and machinery producers are expected to increase production rates and incremental demand from these sectors should also support an increase in sales in 2010. In addition, Severstal expects the export markets in Europe, the Middle East and Africa to continue to be an important source of sales for Russian Steel. "Our customer base for these export sales is well diversified and we intend to use exports to increase utilization of our Russian facilities to full capacity," reads the company's statement.
Severstal's Russian operations currently operate with a capacity utilization level above 95 percent.