PAO Severstal : Severstal reports Q3 2021 -2-

-- Iron ore prices fell by almost USD100/t CFR China from all-time maximums due to a softening of Chinesedemand as China limits steel output. This led also to a decline in steel prices from the record level reached inQ2. The Chinese steel market is affected by steel production restrictions which is positive to price sentiment,however Chinese property market cooling creates the risk of a weakening of steel demand. At the same time thecoking coal market entered severe deficit in China and as a result domestic Chinese coal prices skyrocketed, whichalso pushed prices in the global market higher. Australian high-grade coking coal export prices have exceeded USD400/t FOB.

-- In Russia a temporary 15% export duty has caused domestic HRC price fall below export parity net ofduty.

-- The Russian authorities have confirmed a new tax mechanism which will replace export duty (a complex setof measures including introducing a new excise tax and changing the MET calculation methodology). These changeswill adversely affect Severstal's financial performance in 2022.

Alexander Shevelev, CEO of Severstal Management, commented:

"We continue to develop our response to the continuing issues with the COVID-19 pandemic. In our aim to ensure a safe environment in the workplace for our employees and contractors we continue to encourage our staff to get vaccinated. Today more than 65% of them have already been vaccinated. Also we have successfully achieved our internal target of having employees with immunity through vaccination or antibodies of more than 80% by the end of the summer thus creating a safer environment for everyone.

We also continue to focus on injury prevention. LTIFR for our staff declined in 9m 2021 by 4% to 0.68. However, the combined LTIFR for both our staff and contractors grew in Q3 2021 to 0.88 and regrettably we had two fatalities in the reporting quarter in Vorkutaugol. We conducted an investigation of each of these cases, and took actions to prevent similar incidents in the future. In particular, we strengthened control over compliance with the requirements of mine passports, as well as an intensified focus on the process of assessing and training of our operations managers in health and safety.

In Q3 2021, we saw first signs of a normalisation in the steel market. Iron ore prices fell by almost USD100/t from all-time maximums due to a decrease in the Chinese demand, as China limits steel output. In line with our expectations, spot steel prices also declined from the record level of Q2. The semi-conductor shortage pushed automotive output down in Europe which led to lower steel demand and declining lead times from steel mills, resulting in supply and demand being in balance. The introduction of export duties in Russia caused domestic HRC price to fall to a level below export parity, net of duty.

However, the growth in sales coupled with higher average selling prices (due to the lag between spot prices and actual prices) pushed the Company's financial results to new records. Revenue grew by 9% qoq to USD3.2bn and EBITDA rose by 5% to USD1.7bn. Continuous focus on effective management of working capital enabled us to reach a record FCF of almost USD1bn (+6% qoq). Net debt/EBITDA ratio declined to 0.29.

Severstal's strong performance in Q3 2021 and financial strength of the company help the Board to recommend a dividend of 85.93 roubles per share for Q3 2021."

SEGMENTS PERFORMANCE

Severstal Russian Steel (RSD)

USD million, unless otherwise stated Q3 2021 Q2 2021 qoq      9m 2021 9m 20201 yoy 
Steel sales, kt                    2,704   2,691   0%       8,037   8,093    (1%) 
Semis                              489     317     54%      1,065   261      308% 
Commercial                         1,067   1,066   0%       3,294   4,294    (23%) 
HVA                                1,148   1,308   (12%)    3,678   3,538    4% 
Revenue                            3,098   2,759   12%      8,011   5,137    56% 
EBITDA                             1,069   1,021   5%       2,779   1,133    145% 
EBITDA margin, %                   35      37      (2 ppts) 35      22       13 ppts 

Notes: 1. These data include adjustments made in connection with the change in presentation described inSeverstal's quarterly financial statements.

-- Steel sales are almost flat. The Company increased its export sales share to 51% (+6 ppts qoq) owing tothe decline in steel demand in Russia.

-- Total share of high value-added (HVA) products amounted to 42%.

-- Revenue increased by 12% qoq to USD3,098 mln.

-- EBITDA grew by 5% qoq to USD1,069 mln. EBITDA margin declined to 35% (-2 ppts qoq) on narrowing pricespreads between slabs and raw material basket.

-- The total non-integrated cash cost of slab per tonne at the Cherepovets Steel Mill increased to USD505/t(+11% qoq) affected mainly by higher coal costs. The integrated cash cost of slab amounted to USD225/t (+29% qoq).

Severstal Resources

USD million, unless otherwise stated Q3 2021 Q2 2021 qoq    9m 2021 9m 2020 yoy 
?oal sales, kt                     810     1,149   (30%)  3,257   4,331   (25%) 
Iron ore sales, kt                 4,560   4,659   (2%)   13,361  13,445  (1%) 
Revenue                            1,016   999     2%     2,762   1,275   117% 
EBITDA                             761     733     4%     2,019   614     229% 
EBITDA margin, %                   75      73      2 ppts 73      48      25 ppts 

-- Coal sales decreased by 30% qoq to 0.8 mln tonnes mainly as a result of steam coal sales reduction.

-- Sales of iron ore were down by 2% qoq to 4.6 mln tonnes due to the acceleration of pellet sales to thirdparties and concentrate within Severstal.

-- Revenue from the Resources Division reached USD1,016 mln (+2% qoq). EBITDA increased by 4% qoq to USD761 mln.EBITDA margin increased to 75%.

-- At Vorkutaugol, the cash cost of coal concentrate per tonne amounted to USD102/t (+13% qoq). The cash costof iron ore pellets per tonne at Karelsky Okatysh increased to USD34/t (+3% qoq). At Olcon, the cash cost per tonneof iron ore concentrate grew to USD28/t (+4% qoq).

NOTES 1. Full consolidated interim condensed financial statements are available at http://www.severstal.com/eng/ir/results_and_reports/financial_results/index.phtml. This includes the review report from KPMG, Severstal's externalauditor, carried out in accordance with International Standard on Review Engagements 2410. 2. Severstal's Annual Report 2020 is available at http://www.severstal.com/eng/ir/results_and_reports/annual_reports/index.phtml 3. Each of the directors who is a director at the date of the approval of this document confirms that to thebest of their knowledge: that the consolidated interim condensed financial statements has been prepared inaccordance with IAS34; that the consolidated interim condensed financial statements give a true and fair view ofSeverstal's assets, liabilities, financial position and profit or loss; and that this document contains a fairreview of important events that have occurred during the first nine months of the year and their impact on theconsolidated interim condensed financial statements; and of the principal risks and uncertainties for the remainingthree months of the year; and that the report contains a fair review of related party transactions.

A conference call on Q3 2021 and 9m 2021 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 18 October 2021 at 12.00 (London)/ 14.00 (Moscow).

To join the webcast (with registration form) please follow the link:

https://mm.closir.com/slides?id=314887

*We recommend that participants start dialling in 10 minutes prior to ensure a timely start of the conference call.

To join the conference call, please dial:

United Kingdom Number: [phone] (local access) [phone] (toll free)

US Number: [phone] (local access) [phone] (toll free)

Russian Dial: [phone] (local access)

Participant code: 314887

ANNEX

1. Consolidates sales by product

Sales volumes 
                                     Q3 2021 Q2 2021 qoq   9m 2021 9m 20201 yoy 
Kt 
Coal:                                 127    282     (55%)  754     1,101   (32%) 
Coking coal concentrate               39     38      3%     112     215     (48%) 
Steam coal                            88     244     (64%)  642     886     (28%) 
Iron ore:                             1,092  1,310   (17%)  3,426   4,530   (24%) 
Iron ore pellets                      1,061  1,309   (19%)  3,348   4,343   (23%) 
Iron ore concentrate                  31     1       n/a    78      187     (58%) 
Steel:                                2,694  2,678   1%     8,002   8,059   (1%) 
Semi-finished products                489    317     54%    1,065   260     310% 
Hot-rolled steel:                     1,115  1,102   1%     3,408   4,251   (20%) 
   incl. Hot-rolled high value added 227     211     8%    638      531     20% 
Cold-rolled steel                     248    280     (11%)  785     661     19% 
Galvanized steel                      216    255     (15%)  746     690     8% 
Colour coated coil                    86     119     (28%)  288     373     (23%) 
Long steel                            171    162     6%     491     544     (10%) 
Metalware                             139    175     (21%)  456     426     7% 
Large diameter pipes                  90     75      20%    225     129     74% 
Other tubes, pipes, formed shapes     135    193     (30%)  533     725     (26%) 
Steel solutions                        5     -       n/a    5       -       n/a 

(MORE TO FOLLOW) Dow Jones Newswires

October 18, 2021 03:00 ET (07:00 GMT)