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OAO Severstal Reorganizes to Facilitate Growth

04/15/2008 - OAO Severstal announces a reorganization of its businesses into three principal divisions: Severstal Russian Steel, Severstal Resources, and Severstal International.

OAO Severstal announced a reorganization of its businesses into three principal divisions: Severstal Russian Steel, Severstal Resources, and Severstal International.
 
Severstal Russian Steel—оne of Russia’s largest steel producers—will include steel, pipe, metalware and services as well as scrap procurement operations. Anatoly Kruchinin, currently CEO of Cherepovets Steel Mill, has been appointed as CEO of Severstal Russian Steel.
 
Severstal Resources—сomprising Severstal’s assets relating to iron ore, coal and gold extraction—is one of Russia’s largest producers of pellets and coking coal, and includes all of the company’s mining and gold-mining segments. Roman Deniskin will remain CEO of the division.
 
Severstal International—a newly established division—comprises Lucchini Group in Europe and Severstal North America (SNA) and SeverCorr in North America. Gregory Mason, Corporate COO of OAO Severstal, has been named CEO of the division.
 

OAO Severstal’s Leadership Team
 
Anatoly Kruchinin, who will lead Severstal Russian Steel, began his career at Severstal in 1982, advancing to the position of Chief Power Engineer in 1993, and Commercial Director in March 1999. From January 2002, he worked as Executive Director, becoming Severstal’s CEO in July 2002. Since December 2006, he has been General-Director of Cherepovets Steel Mill. He is Chairman of the Board of Directors of Severstal-metiz, ZAO Severgal, AO Severstallat and Izhora Pipe MillKruchinin is a graduate of the Ivanovo Power Engineering Institute and holds an MBA degree from National Economic Academy under the Government of Russia.
 
Gregory Mason, who will lead Severstal International, joined Severstal in 2004 and was appointed as Severstal’s Chief Operating Officer in 2006. Previous roles include Vice President of the Detroit Steel Co., Technical Director of Caparo Steel, Director of Steelmaking Technology at Davy International, and Chief Engineer at KRUPP Industries, a division of KRUPP Stahl. A registered professional engineer in the USA, Mason received his master’s degree from the Naval University of St. Petersburg.
 
Roman Deniskin, who will lead Severstal Resources, has been Director General of Severstal-resurs since 2002. From 1995 to 2002 Roman worked in the Moscow office of McKinsey & Co., advising steel, mining and smelting companies in Russia, the U.S. and the U.K. Roman has a mathematics and mechanics degree from Moscow State University, from which he graduated magna cum laude, and an MA in economics from Ann Arbor University in Michigan.
The company said the new, streamlined structure, which takes effect in April, will reduce the number of reporting lines between individual operations and senior management. The new structure also establishes the following four functional areas and four service and support areas.

 
  • The Operations functional area will be headed by Gregory Mason, COO and CEO of Severstal International
  • The Finance functional area will be headed by Sergei Kuznetsov, CFO
  • The Corporate Development functional area will be headed by Thomas Verazto, Senior Vice President
  • The Human Resources functional area will be headed by Andrei Mityukov, Senior Vice President
 
  • The Legal Affairs service and support area will be headed by Dmitry Sanin, Senior Vice President & General Council
  • The External Relations service and support area will be headed by Alexei Yegorov, Senior Vice President
  • The Communications and Public Relations service and support area will be headed by Vadim Saveliev, Senior Vice President
  • The Security service and support area will be headed by Vladimir Kozlov, Senior Vice President
 
The company said this development marks a logical ‘next step’ in it’s corporate maturation following its 2006 listing on the London Stock Exchange and the vertical integration process that consolidated its mining and metallurgical assets in Russia and Europe. The organizational realignment will also reinforce the company’s 2006 adoption of its Code of Corporate Governance by streamlining the reporting structure between individual operations and the company’s senior management.
 
“This restructuring is a logical next step in Severstal’s development, reflecting our already strong position as an integrated metals and mining business with a growing international focus,” said Alexey Mordashov, Severstal CEO. “The simplified, more focused structure will serve to improve our competitiveness, increase production, cut costs and maximize profit.”
 
In 2008, Severstal’s financials will be reported according to the 2007 divisional structure.
 
Incorporated in 1993, international steel producer OAO Severstal focuses on high-value-added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tons of steel. Revenues were $15.2 billion and EBITDA was $3.7 billion. EPS was $1.92.