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Severstal's Q2 net profit up 125.2% QOQ

PAOSeverstal's net profit jumped 125.2% to US$608 million, or 75 centsper share, in the second quarter from US$270 million, or 33 cents per share, inthe first quarter, boosted by a foreign exchange gain of US$181 million and a44.0% quarter-over-quarter increase in revenue.

The board recommended a dividend of 19.66 Russian rubles pershare for the quarter, according to a July 21 statement. This was higher thanthe 12.63 rubles pershare announced in the second quarter of 2015.

Second-quarter revenue went up to US$1.58 billion from theUS$1.10 billion in the first quarter, reflecting a sharp rise in averageselling prices for both steel and raw materials, as well as higher salesvolumes mainly in the Russian Steel Division due to seasonally higher demand inthe domestic market.

Group EBITDA gained 92.7% quarter over quarter to US$526million as the increased sales were only partially mitigated by a higher costbase following the appreciation of the ruble and an increase in raw materialcosts.

In the first half, net profit stood at US$878 million,improving by 8.9% from the US$806 million recorded in the same six-month periodin 2015.

Group revenue decreased to US$2.68 billion from US$3.34billion as a result of the net decline in global prices.

Meanwhile, Group EBITDA fell to US$799 million from US$1.17billion as the top line compression was only partially mitigated by a declinein input costs.

CapEx for the half year stood at US$236 million, with US$119million spent in the first quarter and US$117 million in the June quarter. Thiswas 10.3% higher than the US$214 million CapEx in the same period in 2015.

Severstal's CapEx target for the year was 43 billion rubles,subject to foreign exchange fluctuations.

As of June 30, cash and cash equivalents were US$2.07billion, up from US$1.55 billion in end-March due to strong free cash flowgeneration and the offering of US$200 million convertible bonds in April.

The free cash flow generation also offset the company's netdebt, which declined 42.4% from the first quarter to US$511 million.

Severstal added that operations at the coal mine in Russia'snorthern Komi Republic remain suspended as state investigation continues.

In March, the Russian miner 143.1 million rubles ascompensation for families of the miners who died in the February at the mine.

As of July 20, US$1was equivalent to 63.42 Russian rubles.