COMPANY PROFILE -Severstal
Business Sector :Steel
Operating Geography :Russia, Europe, Global
About Severstal :
Severstal is a Russian company mainly operating in the steel and mining industry. It is headquartered in Cherepovets, Russia and was founded on August 24, 1955. The company is majority-owned and controlled by billionaire Alexey Mordashov. The company is a leading Russian steel producer, with a broad product mix, self-sufficiency in raw materials, and an extensive distribution network. It focuses on high value-added flat steel products and the production of long products for construction and downstream sales. It’s downstream assets include the production of large diameter pipes and metal ware for machinery, as well as service centers and stamping facilities for exposed automotive parts. The division has high value-added products. The flagship of Cherepovets Steel Mill is one of the lowest-cost steel mills in the world. It is primely located in north-west Russia, the division’s steel operations enjoy convenient rail access to the Company’s mining operations and low-cost direct river access to the Baltic ports. The Company is also well-positioned to serve the industrial hubs around Saint-Petersburg and Moscow. The Company comprises two major operational divisions: Severstal Resources and Severstal Russian Steel. Both have been ranked as the 16th best of 92 oil, gas, and mining companies on indigenous rights and resource extraction in the Arctic. Being one of the world’s largest vertically integrated mining and steel companies, the company has received the highest platinum award in the SAP Value Award 2020 in the New Horizons category. Severstal is recognized for the implementation of the iDeaL project, which aims to manage the lifecycle of ideas and initiatives. It provides for the use of several SAP products – SAP Innovation Management, SAP Analytics Cloud, and SAPS /4HANA Project System.
Severstal’s unique selling proposition or USP lies in it being Russia’s largest mining industry producing about 17% of total crude production in Russia. Severstal’s mission statement reads “Our mission is to be the leader in value creation. At every stage of our vertically integrated operations we aim to create value at a faster rate than our competitors, from the mining of raw materials right through to the manufacture of high value-added products.” Severstal’s vision statement reads “Our vision is for Severstal to be the leader of the steel industry of the future and the first choice for its customers, employees and partners.”
Severstal Revenue :
US$ 6,870 million - FY ending 31st December 2020 (y-o-y decline 15.8%)
US$ 8,157 million - FY ending 31st December 2019 (y-o-y decline 5%)
US$ 8,580 million - FY ending 31st December 2018
Competitive Analysis of Severstal
The SWOT analysis for Severstal is presented below in a matrix followed by the detailed analysis report
Strengths | Weaknesses |
1. Emphasis on cost reduction in steel production
2. Improving presence among customers through strong online outreach
3. Vertically integrated production boosting self sufficiency
4. Business with breakthrough margins
5. Key collaborations to boost downstream business
| 1. No plans in recycling of iron
2. High dependency on Russian demand for sales
|
Opportunities | Threats |
1. Technology accumulation through Severstal Ventures
2. Finding newer markets to offset low demand in existing markets
| 1. Shrinking global economy hurting steel demands
2. Barriers of iron and steel industry due to contribution in considerable pollution
3. Other materials replacing steel
|
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Detailed SWOT Analysis of Severstal
Strength
1. Emphasis on cost reduction in steel production: The iron and steel industry is largely dependent on the supply of raw material, like iron ore, coke, nickel, etc. for production of a certain grade of steel. Production involves significant amount of cost of production. To enhance profitability, it is important to increase production. Albeit, production for established enterprises largely depends on demand. To make an organization profitable under any demand scenario, it is vital to introduce cost reduction processes in production. Severstal is determined to not only increase productivity but also reduce cost of production through innovative and financial measures. It considerably invests in modernizing its facilities to increase efficiency. According to World Steel Dynamics, Severstal is the one of the lowest cost steel producers in the world. To increase yield of steel thus, decreasing production cost and slag formation, Severstal switched all its molten to solid steel converters to combined blowing in steel formation. In the production of cast iron in CherMK plant, coke consumption was reduced by 10.67% to 335 Kg/ton in 2019 y-o-y through efficient implementation of processes. It has upgraded Izhora Pipe Mills to produce pipes with diameter more than 508mm to cater consumers of the oil and gas industry.
2. Improving presence among customers through strong online outreach: Severstal believes that in order to grow in the modern times and stand out among competitors, it is important to be customer centric, especially in the downstream segment of the business. To increase outreach among customers, Severstal launched its online portal to promote e-commerce and feedback mechanism. Online sales medium was introduced to increase customer reach and convenience and make purchase orders available at fingertips. A direct feedback mechanism through online channels, helps in understanding customer grievances and pockets for improvement. Severstal earned considerably though online mediums with breakthrough share of 32% of the total annual sales in downstream. Online store customer loyalty improved from 41% to 56% in 2019 with total site clocking a footfall of 560,000 visits. The online sales medium helps in data driven production as Severstal had already transitioned itself from production planning to customer oriented supply-chain management along with launching online portal for sales and feedback.
The remaining section under "Strengths" is available only in the 'Complete Report' on purchase.
Weakness
This section is available only in the 'Complete Report' on purchase.
Opportunity
This section is available only in the 'Complete Report' on purchase.
Threats
This section is available only in the 'Complete Report' on purchase.
The PESTLE analysis for Severstal is presented below in a table followed by the detailed analysis report
Political | Economical |
1. Introduction of carbon border tariffs in Europe and its affects
2. Annexation of Crimea by Russia creating troubles for business
3. US imposing tariffs on imported steel and steel derivatives
| 1. Economic downturn due to Covid-19 affecting business
2. Down trends in Russian economy hurting business demands
|
Social | Technological |
1. Urbanization being a key driver of the steel industry
2. The risky nature of job in iron and steel industry
3. Decreasing human capital turning to be a source of slump in Russian economy
4. High preference of iron and steel derivatives as raw material for cookware
| 1. Implementing AI to boost productivity
2. Investing on automation driven production
3. Physical and chemical properties of steel boosting its long-term usability
|
Legal | Environmental |
1. Compliance to UK Governance Code for GDR in London Stock Exchange
2. Converted into PAO as per amended Russian Civil Code in 2014
| 1. Using innovation and technology to reduce the emission of GHG
2. Developing technology to use hydrogen instead of coking coal to offset pollution
|
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Detailed Pestle Analysis of Severstal
Political
This section is available only in the 'Complete Report' on purchase.
Economic
This section is available only in the 'Complete Report' on purchase.
Social
This section is available only in the 'Complete Report' on purchase.
Technological
This section is available only in the 'Complete Report' on purchase.
Legal
This section is available only in the 'Complete Report' on purchase.
Environmental
1. Using innovation and technology to reduce the emission of GHG: The iron and steel industry is a major contributor to the emission of greenhouse gases (GHG). Growing concern of customers and tariffs based on environmental pollution are hurting business sentiment towards steel products. The industry contributes 7 to 9% to the total emissions of GHG. Serverstal being an international company is taking responsible initiatives to reduce its carbon footprint. Severstal is a part of WorldSteel benchmarking system, where opportunities to reduce CO2 emissions are chalked out and implemented in productions and other business activities. The Russian steel and mining titan, supports the Paris Agreement, which suggests reducing carbon emissions by 25% to 30% by 2030, from 1990 levels. The company had plans to reduce 7% of atmospheric reduction between 2018 and 2025, and the company has achieved 41% of the target. It achieved the target through implementation of efficient processes of preparing solid fuel, usage of converter gases and reduction in sulphur dioxide emissions.
The remaining section under "Environmental" is available only in the 'Complete Report' on purchase.
Major Competitors :
- Evraz Group
- Mechel
- MMK
- NLMK
- OEMK
- United Metallurgical Company
- Industrial Metallurgical Holding
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
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Severstal Segmentation, Targeting and Positioning (STP) Analysis |
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References used in Severstal SWOT & PESTLE Analysis Report
1. Reinventing the future of steel- ANNUAL REPORT 2019 - https://www.severstal.com/files/37176/Severstal_annual_report_ENG_2019.pdf
2. Scrap Metal Recycling Market by Type and Geography - Forecast and Analysis 2020-2024 - https://www.technavio.com/report/global-scrap-metal-recycling-market-analysis-share?tnplus
3. Materials Replacing Steel in Oil & Gas Industry - https://www.prnewswire.com/news-releases/materials-replacing-steel-in-oil--gas-industry-300548138.html
4. Brazil becomes Karelsky Okatysh’s latest export market with the start of iron ore pellet deliveries - https://www.severstal.com/eng/media/news/document45012.phtml
5. Explainer: What an EU carbon border tax might look like and who would be hit - https://in.reuters.com/article/climate-change-eu-carbontax-explainer/explainer-what-an-eu-carbon-border-tax-might-look-like-and-who-would-be-hit-idINKBN1YE1CK
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Severstal SWOT and PESTLE analysis has been conducted by Tej Narayan Shaw from IISWBM, Kolkata and reviewed by senior analysts from Barakaat Consulting.
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