April 9, 2019
PAO Severstal (“Severstal”; “the Company”), one of the world’s leading vertically integrated steel and steel-related mining companies, announces that Fitch has upgraded its rating on Severstal to BBB from BBB- on 8 April. The outlook is stable.
The rating agency underlined that the upgrade reflected Severstal’s conservative financial policy during the supply-driven steel price turbulence in 2016-2017 and increasing protectionism since 2018.
Fitch commented in a press release:
“Its strong financial profile has been driven by very low steel-making costs underpinned by the integration into iron ore and coal, focus on high-value added products with over 45% share in sales, and modest capex. This allowed Severstal to repay around USD1 billion over the last three years and achieve one of the lowest leverage levels in the industry with a funds from operations (FFO) adjusted gross leverage of 0.8x at end-2018”.
Alexey Kulichenko, CFO of Severstal, commented:
“We welcome Fitch’s decision to revise Severstal’s credit rating. It recognizes that despite market volatility and growing protectionism, Russian steel companies can secure financial stability through high levels of internal efficiency, a strong balance sheet and a competitive market position.”