Evraz plans to spend $6bn to meet demand

City A.M. Reporter
RUSSIAN steel and mining group Evraz yesterday set out plans for $6bn (£3.8bn) of capital spending through the next four years as it seeks to meet growing global demand for railways and pipelines, particularly in North America.

Evraz, Russia’s largest steel producer and part-owned by billionaire Chelsea FC owner Roman Abramovich, said it plans capital expenditure of $1.5bn a year on average through the coming four years.

The London-listed group also said it was targeting earnings before interest, taxes, depreciation and amortisation (Ebitda) of $5bn in 2016, compared with $2.9bn in 2011.

Evraz plans “increased investment focused on adding value to steel products, particularly in the rail and pipe segments,” the company said, adding that a “positive contribution of investments to Ebitda and cash flow [is] expected from 2013.”

The company, which earlier this week approved a 2011 dividend of $0.17 per ordinary share, said it would remain committed to maintaining a balance between investment and the payment of dividends.

Evraz, whose debt stood at $7.38bn as of 31 March, said its net leverage was likely to rise by year-end, but net debt will not exceed two times Ebitda in the medium term.

The company, which leads the US market for large-diameter pipes (LDP) by production capacity, is upbeat on prospects for growth in the North American steel market in coming years, forecasting growth of four per cent a year through 2016.

The company is one of the world’s top-20 steel producers and produced crude steel output of 16.8m tonnes in 2011.