In 9M 2013 (the period from January to September 2013) the Distribution Network of the Russian Steel Division of OAO Severstal, one of the world’s leading steel and steel-related mining companies, increased sales by 5% and more than doubled its EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) to $19 million on 9M 2012.
The Distribution Network increased sales to the CIS and Northern and Eastern European markets to 858,000 tonnes during the first nine months of the year. Its revenue reached $614 million, which is a 3.7% decrease on the same period of 2012, due to a softer pricing environment.
Between January and September 2013, the Distribution Network increased EBITDA to $19 million from $8 million in 2012.
Andrey Alekseev, Head of the Distribution Network of OAO Severstal, commented: “The Distribution Network aims to ensure the efficient delivery of Severstal’s products and we have achieved these results by consistently executing of our strategy across the different regions in which we operate.”
In Russia the Distribution Network operates through ZAO TD Severstal-Invest whose principal markets are the central and north-western regions, Volga and Black Earth (Chernozem). Deliveries to Russia’s remote regions are carried out through trading manager-agents at [local] offices which allows the company to optimize costs. This year the company closed five of its branches in remote areas of Russia and opened local offices in Bryansk, Saratov, Volgograd and Kaluga.
The Distribution Network in Europe is represented by AO Severstallat, which is successfully developing its delivery business for high value added (HVA) steel products processed and adapted to meet specific customer requirements at the company’s service centres. This year Severstallat achieved record volumes of finished products: almost 120,000 tonnes of pipes, strips, sheet and blanks for 9M 2013.
Severstal-Ukraine and Severstalbel joined the Distribution Network in Q2 2013. Their performances improved over Q2-Q3 2013 due to asset utilization optimization and outsourcing some of their functions. Changes in business processes helped to boost sales to Belarus and Ukraine by 150%.
The Distribution Network cut G&A costs by 15% per tonne of sold products and average sales per employee grew by 31% for the reporting period.
