Magnitogorsk Iron and Steel Works (MMK) took fifth place in the global 2019 Value Creators rankings among metals companies with the highest return on investment, compiled by international consulting company Boston Consulting Group.
The rankings’ methodology is based on total shareholder return (TSR) generated in the past five years. Five-year TSR for MMK shareholders fr om 2014-2018 amounted to 30.3%, according to BCG experts. Shareholder return calculations take into account changes in the share prices and dividend payouts.
“The strong position of MMK in Boston Consulting Group’s rankings is a natural result of the successful execution of our efficient strategy and reflects consistent efforts of the Company focused on increasing its investment appeal. While maintaining a conservative financial profile, MMK provides a high return on investment and is one of the leading Russian companies in terms of the dividends paid,” says Director for Economics at MMK Andrey Eremin.
For more than two years, MMK has been successfully adhering to its dividend policy under which the Company aims to pay at least 50% of free cash flow (FCF) when net debt/EBITDA ratio is below 1.0õ. In particular, the Company paid dividends amounting to 100% FCF for 2018. MMK’s 2025 strategic goal is to become a leader among global metals companies with comparable production volumes in terms of total shareholder return.
Boston Consulting Group’s industry rankings, wh ere MMK is recognised in the Top 5 this year, is part of wider research covering 33 industries of the global economy. The underlying TSR indicator is a long-term metric that reflects the true bottom line for a company’s shareholders, the rankings authors note.
MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel-producing unit encompassing the entire production chain, from the preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of high-value-added products. In 2018, the company produced 12.7 mln tonnes of crude steel and 11.7 mln tonnes of commercial steel products. MMK Group had sales in 2018 of USD 8,214 mln and EBITDA of USD 2,418 mln.