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Russian steelmaker Severstal skips Q3 dividend amid weak market

Russian steelmaker Severstal skips Q3 dividend amid weak market

Severstal, a Russian steelmaker, said that its board had recommended against paying a third-quarter dividend after the net profit fell dramatically due to a weakening economy in Russia.

Severstal reported that its Q3 net profit fell by 62% on an annual basis to 12,99 billion roubles (US$159.9 millions). Profits for the first nine-months of the year fell 57%, to 49.7 bn roubles. Free cash flow also turned negative.

Since last year, the demand for steel in Russia has declined due to a slowdown in activity among major customers such as the construction industry.

Severstal reports that domestic steel consumption dropped by 15% between January and September. Severstal said that high interest rates and limited market financing for construction and engineering projects as well as the postponement or cancellation of infrastructure projects are affecting demand.

The third-quarter revenue fell 18% due to lower steel costs. Sales rose by 3%, to 2.86 millions tons.

In order to combat inflation, the central banks raised its interest rates last year. The rate was the highest since the early 2000s. The central bank began lowering the rate in June, and it has now dropped to 17%.

The crisis in the Russian metal industry and the global metal industry will continue to worsen during the third quarter 2025. The domestic demand continued to decline in tandem with the further cooling down of the economy, said CEO Alexander Shevelev.

Shevelev stated that the decision to not pay dividends allowed the company to "preserve financial resources to implement key strategic projects unconditionally in the future, and to ensure the long-term financial stability of the company during the difficult market period."

In order to maintain financial stability in the face of weak demand, the company hasn't paid any dividends since 2024.

(source: Reuters)