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IR: Relations built to last
Vladimir Zaluzhsky, Head of IR at Severstal
September 17, 2014
Our business: Making steel products from captive raw materials for domestic and global supply
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Severstal is one of the largest in Russia and a global leader in efficiency and financial stability
Source: Bloomberg, company data (H1 2014 – actual results for those reported as of the beginning of September 2014) For the Russian, European and Latin American companies EBITDA is calculated by the companies themselves and converted in $ at average rate for the period; for others - EBITDA is operating income + D&A Total Company EBITDA per tonne of total steel products shipments in 2014
EBITDA margin, % (1H 2014) EBITDA/tonne1, $ (1H 2014) Net debt/EBITDA (1H 2014)
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A cyclical industry, i.e. fully depends on the economic health
Driven mostly by global rather than local news flow
Regardless of the company size, very sensitive to global commodity price
benchmark movements
Is a sizable chunk of world stock indices, while typically a relatively small share
of investors’ portfolios
Mostly invested by generalist fund managers, while there are a lot of
specialized funds as well
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Specifics of the steel and mining sector stocks
Severstal’s investment profile
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Indicator Amount/Comment
MarCap: $8,200 mln
Size category: Large cap
Free Float (FF): 20%
Listing: LSE and Moscow Stock Exchange
Average daily trading volume: $20 mln
Dividend yield: 4%
Debt financing: Several Eurobond issues
Indices: MSCI Russia, Moscow Stock Exchange index
Corporate Governance: Independent Chairman of the Board
Top FF holders: BlackRock, Vanguard, JP Morgan AM, HSBC, UBS AM
Severstal’s GDR performance vs. MSCI Russia
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Severstal’s IR: A team of 3 persons – in line with the global benchmark for our company size
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Global IR Benchmarking
Source: IR Magazine, UK, 2013
IR Team Size (Global Average)
Run regular investor perception study of Severstal vs. real financial and
operational benchmarking of the company to close peers. Helps to spot early
perception gaps (stereotypes) and develop a communications plan to fix
Make sure we support as best as we can the company’s strategy in all our
communications and IR materials
Make sure that sell-side analysts have adequate estimates
Make sure our top management and Board of Directors get a very clear picture
of what is happening on the stock market to manage their expectations
IR trainings for new top speakers
Monitor legislative and regulatory changes and take necessary actions
Make sure the website and other marketing materials are always updated
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Our key IR focus
We are lucky to have all levels of the top management involved in IR
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CEO
Allows investors to get a feel of the corporate culture and a deeper understanding of the
business
Top management gets direct feedback from investors that might be useful for strategic
development and corporate governance enhancement
Good for the sentiment, as demonstrates openness of the company and that we take IR
seriously
CFO Strategy
Plant CEOs
Sales
Non-Execs Treasury IR
• Quarterly NDRs • Capital Market Days • Site visits • Broker conferences • Governance NDRs
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Capital Markets Day is a great opportunity to show your top management and update on the strategy
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Site visits are a great opportunity to show the best of your assets
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IR should be top management’s right hand in understanding the investor world
Technology development and rising disclosure standards (less analyst and
investor need to contact for gathering data)
Top management becoming more accessible to investors (videoconferencing,
videos at the website, social media, twitter)
Investors start relying more on data beyond IR control (ex., company’s staff in
social media)
Need for quicker replying to investor enquiries
Further optimization and simplification of finance functions in companies
leading to reductions in the number of financial controller, financial reporting,
and treasury staff
Specialized funds give way to generalist investors
Further ousting of Alpha by passive investing (index and high-frequency trading) Page 13
Future challenges and opportunities for the IR profession
Thank you!
Severstal IR: + 7 495 926 77 66 [email protected]
www.severstal.com
https://www.facebook.com/SeverstalOAO https://twitter.com/SeverstalOAO