UPDATE 1-Russia's Evraz has no plan for share buyback in 'challenging' market
(Adds more quotes from CFO)
By Maytaal Angel
LONDON, June 17 (Reuters) - Russia's Evraz, one of the country's largest steelmakers, said on Wednesday it has no plans for further share buybacks in a 'challenging market' and would need to see a reduction in net debt before considering paying dividends.
Russia's economy is expected to shrink by 2.5-2.8 percent this year under pressure from a fall in oil prices and from Western sanctions imposed on Moscow over the crisis in Ukraine.
Evraz said in April it would return up to $375 million to its shareholders as part of a tender offer after its 2014 core earnings rose on a weaker rouble.
However, the market situation has deteriorated this year.
"We have no plans for further share buybacks. We believe we are in a much more challenging market environment overall ... so we'll be prioritising deleveraging and keeping a liquidity cushion over all other capital deployment options," its chief financial officer, Pavel Tatyanin, told Reuters in London.
He added that the company's dividend policy had also changed slightly, as it battles falling global steel prices ST-CRU-IDX and a contraction of up to 20 percent in the construction steel market in Russia.
In order to consider paying dividends, Evraz would not only need to see a net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) ratio below three, but would also look for a reduction in overall net debt every six months. The net debt to EBITDA ratio was 2.5 at the end of 2014. Продолжение...