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Severstal to invest 49.5B rubles in FY'18 after nearly doubling Q4'17 profit

PAO Severstal decided to make a capital investment of about 49.5 billion Russian rubles in 2018 after its net profit in the fourth quarter of 2017 almost doubled quarter over quarter.

The Russian steelmaker will invest about 32.5 billion rubles into its Russian steel division, with 18 billion rubles committed to development projects and 14.5 billion rubles for maintenance, environmental and health and safety projects.

The resources division will receive about 17 billion rubles. A total of 8.4 billion rubles will be slated for asset development and 8.8 billion rubles for maintenance of its coal and iron ore operations.

Severstal's fourth-quarter 2017 net profit surged 89.6% quarter over quarter to US$563 million, or 69 U.S. cents per share.

The board recommended a dividend of 27.72 rubles per share for the quarter.

Revenue in the period increased 10.4% quarter over quarter to US$2.18 billion on the back of a significant growth in steel and raw material average selling prices, partially offset by a decline in sales volumes.

The resources segment recorded a 32.4% jump in revenue in the quarter to US$474 million, and revenue for the Russian steel segment was up 5.9% to US$1.96 billion.

Fourth-quarter EBITDA improved 22.4% to US$754 million, and profit from operations jumped 30.7% to US$656 million, compared to the third quarter.

Capital expenditure for the quarter increased 18.1% quarter over quarter due to seasonal growth.

In full year 2017, Severstal's net profit attributable to shareholders dropped to US$1.36 billion, compared to US$1.62 billion a year ago.

The full-year results included US$421 million of nonoperating expenses, compared to US$12 million of income a year ago, and US$409 million of income tax expense, up from US$97 million in 2016.

Revenue in 2017 was up 32.7% year over year to US$7.85 billion on the back of the favorable steel and commodities pricing environment.

Capital expenditure in the year increased 12.6% year over year to US$591 million.

Severstal's hot metal output in the fourth quarter of 2017 increased 5% quarter over quarter to 2.3 million tonnes. Crude steel production in the three months improved 2% compared to the third quarter, to 3 million tonnes.

As of Feb. 1, US$1 was equivalent to 56.16 Russian rubles.