MOSCOW, Feb 3 (Reuters) - Russian steelmaker Severstal expects a further decline in demand this year, its CEO said on Tuesday, pointing to local economic conditions as the company announced a 79% fall
Severstal Anticipates Continued Drop in Steel Demand Amid Profit Decline
Severstal's Financial Performance and Market Outlook
MOSCOW, Feb 3 (Reuters) - Russian steelmaker Severstal expects a further decline in demand this year, its CEO said on Tuesday, pointing to local economic conditions as the company announced a 79% fall in 2025 net profit to 31.99 billion roubles ($416 million).
Current Economic Conditions
Russia's steel demand has been falling since 2024, hit by high interest rates and slowing activity from major customers including the construction sector. Domestic steel consumption fell by approximately 14% in 2025, Severstal said.
Future Projections for Steel Demand
The Russian central bank started cutting its key rate last June from a peak of 21%, the highest level since the early 2000s. It has since lowered it to 16%.
Impact on Dividends and Capital Expenditure
"Despite the gradual easing of monetary policy, the cooling of the economy will have inertia, and therefore we expect a further decline in steel demand in 2026," Severstal CEO Alexander Shevelev said in a statement.
However, the company expects steel output to increase to 11.3 million metric tons this year from 10.8 million tons in 2025, he said.
Severstal's sales of metal products by volume rose 4% to 11.24 million tons last year, but revenue fell 14% to 712.9 billion roubles due to lower prices.
The company reported negative free cash flow for 2025 and will not pay a dividend for the fourth quarter. It last paid a dividend for the third quarter of 2024.
Analyst Akhmed Aliyev at T-Investments said the likelihood of payouts in 2026 was very low.
Severstal said it sees 2026 capital expenditure falling to 147 billion roubles from 173 billion in 2025.
($1 = 76.8500 roubles)
(Reporting by Anastasia Lyrchikova; Editing by Mark Trevelyan)
