Overview
Severstal, one of Russia's largest steel producers, reported a marked deterioration in financial results for 2025 and signalled that demand for steel is likely to weaken further in 2026 even as it intends to raise output. The company posted a large drop in net profit and lower revenue as prices for steel fell, and it described an operating environment constrained by subdued domestic consumption.
Financial results
For 2025, Severstal's net profit fell 79% to 31.99 billion roubles ($416 million). Revenue declined 14% year-on-year to 712.9 billion roubles, a decrease the company attributed to weaker steel prices. Severstal also recorded negative free cash flow for the year.
Demand outlook
While the company expects monetary policy to ease gradually, it said the economy's cooling has momentum, and that will weigh on steel consumption next year. "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.
Severstal noted that Russia's steel demand has been contracting since 2024, hit by elevated interest rates and lower activity from major buyers, especially within the construction sector. The company estimated that domestic steel consumption fell by roughly 14% in 2025.
Production and volumes
Despite the weak demand outlook, Severstal plans to increase steel production to 11.3 million metric tons in 2026, up from 10.8 million tons in 2025. In 2025 the company's sales volume of metal products rose 4% to 11.24 million tons.
Capital returns and liquidity
Against the backdrop of negative free cash flow for 2025, Severstal said it will not pay a dividend for the fourth quarter. The company's last dividend payment was for the third quarter of 2024.
Macro context cited by the company
Severstal highlighted the impact of Russia's interest-rate path on demand. The central bank has been cutting its key rate since June last year, bringing it down from a peak of 21% - the highest level since the early 2000s - to the current 16%.
Implication
The combination of falling prices, sharply lower profitability, negative free cash flow and a pause in dividend payments underscores the strain on Severstal's operations amid softer domestic demand. The company is positioning for higher output next year even as it warns of continued weakness in demand.