Russian steelmaker Novolipetsk Steel (NLMK) announced on Monday a new five-year plan to increase core earnings by $1.25 billion annually and revised its dividend policy, the company’s President Grigory Fedorishin told Vedomosti in an interview.
The Lipetsk-located NLMK, controlled by billionaire Vladimir Lisin, said its 2022 strategy also aims to increase steel sales to 18 million tons a year.
Fedorishin said the strategy will focus on operational efficiency initiatives, with investment growing to an average of around $0.9 billion per year between 2019 and 2023 from $0.7 billion in 2018. Capital expenditure could fall to $0.6 billion per year after 2023, it added.
To fund its activities, NLMK is considering turning to the bond market to issue either a dollar- or a rouble-denominated bond, he added.
Globally, the steelmaker sees annual demand growth at around 1 percent over the course of the next five years and at 2 to 3 percent annually in Russia.
NLMK also announced a revised dividend policy and said it would pay 100 percent of free cash flow in dividends if its net debt is equal to or below one times earnings before interest, taxation, depreciation, and amortization (EBITDA), the company said. The company will pay 50 percent of free cash flow in dividends if the net debt is above one times EBITDA, it said.
NLMK also announced a fourth-quarter dividend of 5.80 roubles ($0.0882) per share.
In February, NLMK said revenue rose 20 percent in 2018 compared to the previous year, with sales hitting an all-time high.