May 29, 2019

PAO Severstal announces that the Company’s organizational structure has been reconfigured to support its updated strategy and ensure it consistently delivers an excellent customer experience. Based on agile business principles, all of the Company’s production and “selling” divisions now fall under two streams – upstream and downstream, for which common business goals are set.

Upstream includes all of Severstal’s raw materials enterprises (Vorkutaugol, Karelsky Okatysh, Yakovlevsky GOK, Olkon), coke-producing and steelmaking (before liquid steel production), and Vtorchermet and SPb-Giproshakht. These units represent 70% of the Company’s production costs, so the most important task of this stream is to ensure the Company’s cost leadership through end-to-end goal setting, collective motivation and tighter coordination.

A key area of transformation under the new structure will affect the Downstream business. Downstream includes the production of flat, section and tube rolled products, Severstal-metiz, finished products, marketing, sales functions and the downstream material management department. The goal of this stream is to provide an excellent experience for the Company’s customers throughout the chain from rolling to delivering the solution to the business customer.

Downstream is divided into three key areas, representing Severstal’s primary client segments: “Construction”, “Energy” and “Mechanical Engineering”. Industry teams for each of these areas comprise a flexible composition of industrial, commercial and technological specialists. The key task for the industry teams in all three areas is to work directly with the client, optimizing a number of processes and jointly developing and creating unique trade offers. In order to directly introduce consumer initiatives into production, experts from the technical development and quality department and technology development centres (MDGs) will work with the industry teams.

Evgeny Chernyakov, who previously held the position of Severstal’s Sales Director, has been appointed Director for work with companies in the construction industry. His team will focus on the supply of metal products to construction companies, manufacturers of building materials, components (metal tiles, sandwich panels, windows, doors, etc.) and metal structures.

Dmitry Goroshkov, who previously held the position of Marketing Director at Severstal, has been appointed Director for work with energy companies. His industry team is focused on working with customers from the energy sector, not only on sales of pipe products, but also other products and customized services.

The third industry team, “Mashinostroenie”, headed by Alexey Pokatilov, will be responsible for business development and sales growth focusing on the automotive and engineering sectors, as well as manufacturers of household appliances and industrial packaging. Alexey joined Severstal from PJSC AvtoVAZ, where for four-and-a-half years he headed the Department for Sales and Marketing of Components and business development with external customers.

Maria Shalina, previously a Business Partner in Severstal’s Transformation Office focused on the strategic priority “Excellent Customer Experience”, has been appointed Director of marketing and customer experience improvement at Severstal.

Alexander Shevelev, CEO of Severstal, said:

“The key priority of Severstal’s updated strategy is to ensure we deliver an excellent customer experience. We are convinced that the future lies with those companies that can quickly provide consumers with unique solutions based on a deep understanding of their needs. In order to achieve the goals we had set we knew we needed to make a number of changes to our internal processes, including the organizational structure of the Company to create a new format for cooperation with customers. Severstal is the first metallurgical company in Russia to make such profound changes, restructuring to become wholly client-centric. As a result of these changes, Severstal will become an even more stable and reliable partner for its customers, not only able to offer high-quality steel, but also steel-based solutions that match our clients’ business needs.”