Annual Report 2007 - Severstal

Sales by products
2007 2006 Change year-on-year %
Thousand US$ Thousand US$ Thousand US$
tonnes million tonnes million tonnes million
Pig iron and Hot metal
(PI&HM) 417 156 430 120 (3.0) 30.0
Steel products
Semi-finished products
(excl. PI&HM) 983 687 999 795 (1.6) (13.6)
Long products 2,130 2,207 2,201 1,736 (3.2) 27.1
Rails 313 322 368 375 (14.9) (14.1)
Total steel products 3,426 3,216 3,568 2,906 (4.0) 10.7
Total net sales by products 3,843 3,372 3,998 3,026 (3.9) 11.4
Others and shipping – 385 – 331 – 16.3
Total sales revenue 3,843 3,757 3,998 3,357 (3.9) 11.9
Key performance indicators
Increased steel prices confirmed the general positive trend for
finished goods and helped make Lucchini US$3,757 million in
revenue in 2007, 11.9% higher than in 2006. EBITDA in 2007 was
US$416 million with a positive performance of 23.8% compared
to the previous year.
Operations
In 2007, Lucchini produced 3,585,000 tonnes of crude steel, a
0.5% increase on the previous year. Production of finished rolled
steel (long products and rails) was a record 2,329,000 tonnes.
Production of semi-finished products decreased by 7.2% from
1,318,000 tonnes in 2006 to 1,223,000 tonnes in 2007. Production
of long products increased by 4.6% from 1,927,000 tonnes in
2006 to 2,016,000 tonnes in 2007.
Lucchini production volumes
2007 2006 Change
year-onthousand
tonnes year %
Total output
Hot metal 2,534 2,426 4.5
Crude steel 3,585 3,567 0.5
Production for sale
(excl. inter-company transfers)
Semi-finished products 1,223 1,318 (7.2)
Long products 2,016 1,927 4.6
Rails 313 311 0.6
Downstream products 73 110 (33.6)
Total products for sale 3,625 3,666 (1.1)
Sales and marketing
European economic growth led to a 5.3% increase in steel
consumption in Europe in 2007. However, European producers,
and Italian in particular, are affected by the import of Chinese
products and a decline in export sales.
Wire rod demand and prices increased during 2007, with
a second half of the year influenced by the increase in Chinese
imports; the bars market was favourable due to an increase in
mechanical engineering and automotive businesses; the rails
market saw internal demand marginally down although this was
compensated for by an increase in export sales.
Lucchini total sales volume of 3,843,000 tonnes was 3.9%
lower than in 2006. Increase in revenues by 11.9% was mainly
due to positive price trends in 2007.
Sales revenues of long products has increased by 27.1%, while
volumes decreased by 3.2%. Sales revenues of long products
account for 58.7% of total Lucchini Group’s revenue in 2007.
Sales volumes of semi-finished products (excl. Hot Metal and
Pig Iron) were 1.6% lower in 2007 compared to 2006, partially
due to the strategic decision to reduce slab sales in Q4 2007 as a
result of the unfavourable exchange rate dynamics. At the same
time, sales revenues of semi-finished products decreased by
13.6% and currently account for 18.3% of the total Lucchini
Group’s revenue in 2007.
Sales volumes of rails decreased by 14.9% while revenues
decreased by 14.1%. Rails accounted for 8.6% of total Lucchini
Group’s revenues in 2007.
Severstal Annual Report 2007 51