OREANDA-NEWS. On 14 April 2008 was announced, that results for 2007 of "Severstal-metiz" reflect EBITDA reaching 87.3 million US dollars, exceeding 2006 levels by 1.8 times, 2006 result being 48.6 million US dollars. Operating profitability has grown by 2.8 times and reached 7.5 %, the highest result among Russian manufacturers of steel wire products.

Olga Naumova, the CEO of the group, commented: "These results clearly demonstrate our ability to successfully follow the chosen strategy. The strategy is aimed on the reduction in sales of low margin products to the European and CIS markets, the increase of share of high value added products within the product portfolio, reduction of costs and modernization of its production, optimization of the infrastructure, improvement of quality, and development of the service for its clients."

In 2008 "Severstal-metiz" will continue to improve the product portfolio by moving from low value added to high value added products, reduce costs and strengthen its position in key markets.

It is forecasted, that this year the Russian and Ukrainian markets will continue to grow by around 5-6 %. In these markets competition, both from national manufacturers and importers, will rise and an increase in the quality requirements is also expected. In view of these changes "Severstal-metiz" group of companies will concentrate on three main areas: new product development, quality and service improvements, and active promotion of higher added value products. Forecasted sales within the Russian Federation will be up to 680-690 thousand tons (slightly above 2007 levels). In the Ukraine a small reduction in sales volume of approximately 70 thousand tons is expected due to the reduction of share of low margin products.

In the other key hardware markets – the CIS countries – competition will increase, both because of cheaper imports and the commissioning of new manufacturing capacities. An improved product portfolio and an increased level of more complex, high added value products will allow the "Severstal-metiz" group of companies to strengthen its market position in the long-term. Forecasted sales volume will be approximately 43 thousand tons.

As it was previously reported, it is planned to concentrate the Sales and Marketing activities in the European market into one management structure. Previously these functions were carried out by the individual companies within “Severstal-metiz”. This plan has now been implemented with the introduction of Mr Andrew Parker, the CEO of Carrington Wire, to head up this structure. The combined resources of this new structure will allow the Group to react more quickly to customers’ needs, raise efficiency of the activities in Europe and strengthen the position of "Severstal-metiz” as the partner continuously working to perfect its services and products in cooperation with its clients.

As in the case in other markets, the emphasis in the European Operations is to move from high volume low margin products (for example Low Carbon wires and nails) to higher margin products (for example cold heading wires, high carbon steel wire and galvanized wires).

The main projects of the 2008 investment program are aimed at growth in volume of high added value products and new product development. Among these projects is the increase of PC strand manufacture, the development of fasteners production, increase of the production of steel shaped structures with rectangular and complex sections, welding wire and mesh for the chemical industry.

Also important for the group of companies is continued review of the infrastructure and the modernization of its manufacturing facilities. Of primary importance is the "North-South" project in Volgograd plant which includes optimization of plant territories, concentration of total manufacturing in a southern part of the site, and the further expansion of the industrial centre "Volgograd". Of equal importance is the project of optimization of wire drawing capacity at "Dneprometiz".

In all the "Severstal-metiz" group of companies is planning to more than double the volume of its investments (up to 41 million US dollars) in comparison with 2007.