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Home > Finance > Russia's Severstal reports big profit drop, sees further decline in steel demand

Russia's Severstal reports big profit drop, sees further decline in steel demand

Published by Global Banking and Finance Review

Posted on February 3, 2026

2 min read

Last updated: February 3, 2026

Russia's Severstal reports big profit drop, sees further decline in steel demand - Finance news and analysis from Global Banking & Finance Review

Tags:GDP financial crisis economic growth monetary policy capital expenditure

Quick Summary

Severstal reports a 79% profit drop in 2025 and anticipates further steel demand decline due to economic conditions, despite interest rate cuts.

Severstal Anticipates Continued Drop in Steel Demand Amid Profit Decline

Severstal's Financial Performance and Market Outlook

MOSCOW, Feb 3 (Reuters) - Russian steelmaker Severstal expects a further decline in demand this year, its CEO said on Tuesday, pointing to local economic conditions as the company announced a 79% fall in 2025 net profit to 31.99 billion roubles ($416 million).

Current Economic Conditions

Russia's steel demand has been falling since 2024, hit by high interest rates and slowing activity from major customers including the construction sector. Domestic steel consumption fell by approximately 14% in 2025, Severstal said.

Future Projections for Steel Demand

The Russian central bank started cutting its key rate last June from a peak of 21%, the highest level since the early 2000s. It has since lowered it to 16%.

Impact on Dividends and Capital Expenditure

"Despite the gradual easing of monetary policy, the cooling of the economy will have inertia, and therefore we expect a further decline in steel demand in 2026," Severstal CEO Alexander Shevelev said in a statement.

However, the company expects steel output to increase to 11.3 million metric tons this year from 10.8 million tons in 2025, he said.

Severstal's sales of metal products by volume rose 4% to 11.24 million tons last year, but revenue fell 14% to 712.9 billion roubles due to lower prices.

The company reported negative free cash flow for 2025 and will not pay a dividend for the fourth quarter. It last paid a dividend for the third quarter of 2024.

Analyst Akhmed Aliyev at T-Investments said the likelihood of payouts in 2026 was very low.

Severstal said it sees 2026 capital expenditure falling to 147 billion roubles from 173 billion in 2025.

($1 = 76.8500 roubles)

(Reporting by Anastasia Lyrchikova; Editing by Mark Trevelyan)

Key Takeaways

•Severstal's net profit fell by 79% in 2025.
•Steel demand in Russia continues to decline.
•Interest rates have been reduced from a peak of 21%.
•Severstal expects no dividends for 2025's fourth quarter.
•Capital expenditure is projected to decrease in 2026.

Frequently Asked Questions about Russia's Severstal reports big profit drop, sees further decline in steel demand

1What is net profit?

Net profit is the amount of money that remains after all expenses, taxes, and costs have been subtracted from total revenue. It is an important indicator of a company's profitability.

2What is capital expenditure?

Capital expenditure refers to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or equipment. It is a key component of a company's investment strategy.

3What is monetary policy?

Monetary policy is the process by which a central bank manages the supply of money, interest rates, and inflation to achieve macroeconomic objectives such as controlling inflation and stabilizing currency.