OAO Severstal (LSE: SVST) announced its financial results for the fourth quarter and the full year of 2010.

FY 2010 HIGHLIGHTS:

• Revenue up 41.5% to $13,573 million (FY 2009: $9,594 million);
• Substantially improved EBITDA and EBITDA margin following the decision to focus Severstal International on Dearborn and Columbus while classifying the underperforming assets as assets held for sale;
• Group EBITDA up 105.3% to $3,263 million (FY 2009: $1,589 million);
• Group EBITDA margin increased to 24.0% (FY 2009: 16.6%);
• Profit from continuing operations of $1,427 million;
• Loss attributable to shareholders of $577 million due to discontinued operations;

Q4 2010 HIGHLIGHTS:

• Solid financial performance reflecting benefits of vertical integration and global economic recovery;
• Good revenue and EBITDA growth at Russian Steel and Severstal Resources: Nordgold EBITDA up 27.4% to $121 million;
• Decision to sell certain underperforming US assets and to focus Severstal International on Dearborn and

Columbus;

• The Board is recommending a dividend of 2.42 rubles per share;
• Group revenue up 7.5% to $3,726 million and EBITDA up 6.4% to $899 million;
• Group EBITDA margin of 24.1%;
• Profit from continuing operations of $261 million;
• Loss attributable to shareholders of $352 million due to discontinued operations;

OUTLOOK:

• Improving market conditions with increasing production and sales volumes;
• Benefits of vertical integration and expanding presence in markets with higher growth characteristics;
• Steel prices remain strong due to raw material price growth and restocking;
• Russia and CIS steel demand estimated to increase by 8% in 2011.

FINANCIAL POSITION HIGHLIGHTS:

• Operating cash flow remains high with $1,128 million generated in H2 2010;
• Net Debt/EBITDA reached of 1.3x at the end of 2010, below target of 1.5x;
• Full year 2011 maturities total $1,331 million and are well diversified both by source of debt and currency;
• Good access to domestic and international debt capital markets including issuing a $3 billion Eurobond programme in October 2010.

Alexey Mordashov, CEO of Severstal, commented: “The world economic recovery last year brought more visibility and optimism to our business and from the second quarter of 2010 we performed in line with our expectations. During the year we were cash generative and further strengthened our financing structure. Our strength as an integrated steel and mining group means Severstal is well placed to benefit from these trends.

We continue to focus our investment activities on areas where we see the greatest potential for growth and as a result we are further investing in steel-related mining and gold projects, as well as in the expansion of our Russian steel operations. In North America we are focusing our investment on completion of modernization projects at competitive assets. Accelerating economic growth in our key markets in 2011 should produce another strong year for Severstal as demand for steel improves and raw material prices rise.”

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