11:04, 11 March 2019

NLMK Group Announces New Strategy and New Dividend Policy

NLMK Group announces the launch of its new Strategy 2022 and changes to its dividend policy.

Strategy 2022 targets net gains of +$1.25 billion to EBITDA per annum, with $0.5 billion from operational efficiency programs that require no additional capex.

Strategy 2022 is based on enhancing NLMK Group’s competitive advantages. Through operational efficiency initiatives and investment projects, as well as debottlenecking the steelmaking operations, steel output at our Lipetsk site will increase by 1 million tons per year. Steel output growth will be 100% covered by captive iron ore from Stoilensky.

Added steel output will be sold in the form of premium and niche HVA products. Target growth in sales of HVA products will total 1.7 million tons, driven by investment into the group’s rolling operations in Russia, Europe and the US.

As part of its strategic goal on sustainable development, NLMK will continue to execute its target programs aimed at reducing its environmental footprint, improving occupational health and safety, and reducing the injury rate.

In line with its revised dividend policy, NLMK Group plans to pay out 100% of its free cash flow to shareholders if its Net debt/EBITDA is less than or equal to 1.0x; and 50% of its free cash flow if its Net debt/EBITDA is higher than 1.0x. NLMK Group will use a normalized capex of $700 million per year to calculate its free cash flow for the purpose of dividend payments, even if actual investments are higher.

Grigory Fedorishin, NLMK Group CEO and President, said: “We continue to set ourselves ambitious objectives. Our new Strategy targets a structural EBITDA gain of $1.25 billion per year, up by 35% YoY. Strategy 2022 is marked by high resilience to external market factors, being based on enhancing the company’s competitive advantages: low cash cost, efficient vertical integration, product mix diversification by product and by market, and a high level of production and sales localization. NLMK’s new Strategy is balanced across operational and investment gains: our target operational efficiency gains are of the same magnitude as our target gains from investment projects. The new Strategy is also well balanced in terms of capital allocation: NLMK invests in growth projects while maintaining its financial stability and adhering to a highly competitive dividend policy. As part of Strategy 2022, we will continue to work on maximizing stakeholder value.”

NLMK welcomes all steel industry professionals to visit its stand at Metal-Expo'2019, the 25th Jubilee International Exhibition, November 12-15, Hall 75, VDNHa, Moscow, Russia.

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