Dear shareholders, partners, and colleagues,

The key priorities for Metalloinvest’s development are strengthening customer focus, improving product quality, and health, safety, and environment (HSE) matters. The Company implemented a series of initiatives during 2017, making notable progress in all the above-mentioned areas.

Metalloinvest’s output grew across almost all product segments in 2017, driven by the ongoing implementation of investment projects, the construction and upgrading of production facilities, and a major renewal of the Company’s vehicle fleet.

Our strong financial performance proves that the Company has been right to focus on growing the share of high value-added (HVA) products in its output. Metalloinvest has delivered a considerable increase in its 2017 revenue and EBITDA, with a five-year record-high EBITDA margin of 34%.

A key highlight of 2017 was the launch of the third hot briquetted iron plant (HBI-3 Plant) at Lebedinsky GOK, which has substantially reinforced Metalloinvest’s leadership in the global market for premium metallised raw materials. A number of major investment projects completed in 2017 at Mikhailovsky GOK, OEMK, and Ural Steel have consolidated Metalloinvest’s position in the markets for iron ore raw materials, high-quality rolled steel products (SBQ), wheel and railway billets.

Through its prudent and proactive debt management policy, the Company successfully reduced its Net Debt/EBITDA to a comfortable level below 2x by the end of the year. The debt portfolio structure and repayment schedule were also improved. The Company’s healthy financial position and the benefits of its business model have been confirmed by international rating agencies. As a result of the Company’s efforts in 2017, Moody’s has revised its outlook on Metalloinvest’s rating from ‘Stable’ to ‘Positive’.

During the year, significant progress was made on the Company’s comprehensive business transformation programme. The Multifunctional Shared Services Centre (MF SSC) was launched and centralised; an integrated financial and business management system was designed for the Company’s plants; and some of the Management Company’s functions were relocated to regional offices, which resulted in improved business processes and lower administrative costs.

The successful completion of the business transformation programme will drive improvements across all internal processes at Metalloinvest and speed up the development of new products, while enabling faster and more effective responses to today’s market challenges.

At Metalloinvest we place a particular emphasis on HSE, and regard occupational and environmental safety management as an essential component of the Company’s sustainable success. We are guided by global best practices, while seeking to completely eradicate workplace injuries and adopting solutions to considerably reduce our environmental footprint.

We view partnerships as a key tool to create value for all stakeholders. Through close relations with customers, suppliers, investors, banks, regional communities, universities, and research institutes, the Company increases the efficiency of its operations while simultaneously improving customer experience and building a platform for sustainable long-term growth.

Metalloinvest continues to pursue its strategic goals, consolidating its leadership in the HVA market and creating value for all stakeholders.

I am confident that through the spirit of teamwork and the strong commitment of all our employees and partners, we will be able to achieve success and outstanding performance in 2018, which will serve as an ideal platform for the Company’s future growth.

Ivan Streshinsky
Chairman of the Board of Directors