News

31 March 2006 Novolipetsk

Novolipetsk Steel (NLMK) adopts internal restructuring plan

Novolipetsk Steel (LSE: NLMK) today announced that it has embarked on an internal restructuring plan aimed at:

- optimizing the asset portfolio of the Company
- strengthening vertical integration of the Company; and
- building up an efficient management structure.


The restructuing plan approved by the Board puts forward the following key steps:

to optimize the composition of the Company through further consolidation of NLMK’s core assets: steel, mining and supporting businesses
to continue the strategy of divesting NLMK’s stakes in non-core assets, including financial and auxiliary transportation assets;
to develop a divisional management structure organized along the key segments of the Company’s value chain: technology division, mining division, steel division and sales division;
to set up a Corporate Centre consolidating the following functions: strategic planning, finance, external relations, HR, legal services, IT, environmental compliance.

NLMK’s asset portfolio management strategy has a clear focus on maximizing the value of existing assets and getting the maximum return from the divestment of non-core businesses. The most recent M&A activities of the Company have included divestment of the minority interest in Lebedinsky GOK, acquisition of DanSteel A/S, consolidation of an iron ore producer KMA-Ruda, purchase of majority interest in coke producer Altai-Koks and 100% interest in Prokopievskugol Coal Company.

The management structure reorganization and creation of functional divisions is a response to the growing size and importance of the R&D, mining and sales units of the Company. These divisions significantly enhance the performance of the flagship steel division, expanding the Company’s value chain.

The Corporate Centre is being set up to increase the efficiency of the Company’s business processes by centralizing key management functions. This will result in the increased quality and transparency of decision-making and greater management accountability to shareholders.

Commenting on today’s announcement, Dr. Vladimir Lisin, Chairman and controlling shareholder of NLMK, said:

“Our business is successfully growing as a result of NLMK’s solid strategy and strong commitment to development as a leading global steel producer. The Board believes that focusing NLMK on its core businesses and improving its management structure will further boost growth and shareholder value.”