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2019
Annual Report
1.0
Overview
1.1
ABOUT THE COMPANY

omk - is a Russian manufacturer of high-quality steel products and integrated solutions designed to meet the most exacting consumer specifications in the fuel energy, transport, construction and other industries.

The group comprises 6 large steel companies and a network of train car repair depots.

Vyksa
Steel Works
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Almetyevsk
Pipe Plant
|||||||||||||||||||||||||||||||||||||||||||||||||||| Almetyevsk, Republic of Tatarstan
Vyksa
Steel Works
|||||||||||||||||||||||||||||||||||||||||||||||||||| Vyksa, Nizhny Novgorod Region
Chusovoy
Steel Works
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Blagoveshchensk
Valves Plant
|||||||||||||||||||||||||||||||||||||||||||||||||||| Blagoveshchensk, Republic of Bashkortostan
Train Car Repair
Company
|||||||||||||||||||||||||||||||||||||||||||||||||||| 25 regions of Russia
Trubodetal |||||||||||||||||||||||||||||||||||||||||||||||||||| Chelyabinsk, Chelyabinsk Region
Belenergomash |||||||||||||||||||||||||||||||||||||||||||||||||||| Belgorod, Belgorod RegionOMK agreed to acquire a new enterprise in February 2020.
1.1
ABOUT THE COMPANY
  1. Vyksa Steel Works
  2. Blagoveshchensk Valves Plant
  3. Trubodetal
  4. Almetyevsk Pipe Plant
  5. Chusovoy Steel Works
  6. Belenergomash
  7. Train Car Repair Company
1.1
ABOUT THE COMPANY
Train Car Repair Company 25 regions of Russia
Depots
  1. Bologoe
  2. Kem
  3. Sasovo
  4. Tula
  5. Sosnogorsk
  6. Kaluga
  7. Murom
  8. Arzamas
  9. Krasnoufimsk
  10. Salsk
  11. Rossosh
  12. Valuyki
  13. Belgorod
  14. Yelets
  15. Ulyanovsk
  16. Ruzayevka
  17. Kurgan
  1. Kartaly
  2. Zlatoust
  3. Berdyaush
  4. Egorshino
  5. Goroblagodatskaya
  6. Smychka
  7. Vereshchagino
  8. Uzhur
  9. Vikhorevka
  10. Zima
  11. Belogorsk
  12. Kemerovo
  13. Topki
  14. Bolotnaya
  15. Barabinsk
  16. Rubtsovsk
  17. Neftyanaya
1.1
ABOUT THE COMPANY

9divisions

Large Diameter Pipes DivisionVyksa
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  • Thick-Plate Mill 5000 (Mill 5000): production of hot-rolled thick sheet
  • VSW Electric Pipe Welding Shop No. 4: production of large diameter pipes
  • Pipe Anti-Corrosion Coating Shop
Oil and Gas Pipes Division Vyksa
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  • Casting and rolling mill: production of hot-rolled sheet
  • VSW Electric Pipe Welding Shop No. 2: production of water and gas pipes and small sections
  • VSW Electric Pipe Welding Shop No. 3: production of oil and gas pipes and large sections
  • VSW Electric Pipe Welding Shop No. 5: production of casing pipes
  • VSW Electric Pipe Welding Shop No. 1: casing finishing centre and production of tubing
  • Seamless Pipe Shop (opening in 2021)
1.1
ABOUT THE COMPANY
Trubodetal Division Chelyabinsk
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  • Trubodetal Plant: production of pipe fittings
APP Division Almetyevsk
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  • Almetyevsk Pipe Plant: production of oil and gas pipes, water and gas pipes, and shaped pipes
BVP Division Blagoveshchensk
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  • Blagoveshchensk Valves Plant: production of pipeline valves
CSW Division Chusovoy
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  • Chusovoy Steel Works: production of automotive springs
Railway Wh eels Division Vyksa
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  • VSW Wheel Plant: production of railway wheels
Train Car Repair Company 25 regions of Russia
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  • Depot-based and capital repairs and maintenance of train cars, rolling stock revamping and maintenance
Belenergomash Division Belgorod
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  • Production of connecting elements for pipelines, pipes, bellows expansion joints, metal structures, and equipment for boiler rooms.
1.1
ABOUT THE COMPANY
Russian market position* *estimated
1 st place
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Pipeline fittings
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Automotive springs
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Railway wheels (on the 1520 sector)
1.1
ABOUT THE COMPANY
Russian market position* *estimated
2 nd placeо
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Casing pipes
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Water and gas pipes
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Large diameter pipes
1.1
ABOUT THE COMPANY
Russian market position* *estimated
Significant share

Train car repair and maintenance

Pipeline valves in BVP operating segments

3 rd place
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All tubular products
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Oil and gas pipes
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Shaped pipes
1.2
Geographical reach

Most of OMK’s products are sold in Russia, but the company is active in the international market. In 2019, deliveries were made to more than 25 countries.

1.3
Results
Production and social responsibility
Social
responsibility
68 +3p.p. employee engagement
0,72 -0,53p. Lost Time Injury Frequency Rate (LTIFR)
861 million roubles on social and charity projects
1051 million roubles on environment protection
The main results of the year
1706 -14%
tubular pro ducts thousands of tonnes
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594 -23%
lar ge diam eter pipes thousands of tonnes
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1112 -8%
small and medium diameter pipes thousands of tonnes
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636 +16%
wide sheet thousands of tonnes
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1208 -5%
rolled products (rolls and sheets) thousands of tonnes
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951 +11%
railway wheels thousands of units
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14 +8%
pipeline fittings thousands of tonnes
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5,5 +12%
pipeline valves thousands of tonnes
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48,4 +10%
automotive springs thousands of tonnes
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1.4
A message from the Chair of the Board of Directors
Anatoly Sedykh
Chair of the Board of Directors

Dear colleagues and partners, Welcome to our annual report.

2019 saw OMK cement its position at the forefront of the steel industry. We are the number one producer of railway wheels, automotive springs, and pipeline fittings on the Russian market. We are also the second largest manufacturer of large diameter pipes, casings, and water and gas pipe segments, and are among the top three producers of several other product types. These high rankings reflect the implementation of our corporate strategy.

Performance

On the basis of our annual results and the most recent audit conducted by Toyota Engineering Corporation, no fewer than three OMK plants were awarded medals for production system development, including Vyksa Steel Works, which was awarded a gold medal and 4.03 points out of a possible 5. That is the single highest rating in the global steelmaking industry. The auditors noted that production systems are developing at pace across all OMK plants, and that this is having a positive impact on the business.

Investment

OMK is pressing ahead with an extensive investment programme. We are building a shop in Nizhny Novgorod Region to manufacture and finish longitudinally welded casings and tubing, and produce seamless casings. This will allow OMK to create 2,500 modern jobs. In 2019, we committed RUB 34 billion to investment projects, an almost 100% increase on the preceding year.

New assets

In addition to investing in our existing products, following a comprehensive evaluation of potential growth and possible risks, we are also making active preparations to enter new markets. The OMK family was joined in 2019 by train car repair network VRK. This important step has opened up new business prospects, enabling us to establish a presence in the service sector for our clientele of railway car operators and owners. As the third largest service provider in the industry, VRK is a significant market player. The OMK team welcomed 6,500 new employees from 25 regions of the Russian Federation. It is our strategic objective to create the best service company in Russia.

OMK also concluded an agreement to acquire leading power engineering company Belenergomash. For OMK, this acquisition represents new clients and new products. Belenergomash, which is located in the city of Belgorod, employs some 3,600 people. The facility manufactures steel structures and machinery for the nuclear industry and boiler plants.

Quality

Clients choose OMK primarily for the high quality of the products that we manufacture. In 2019, we found ourselves among 12 companies recognized with the Government of the Russian Federation Prize for Quality. I would like to take this opportunity to thank the Government of the Russian Federation, and the Ministry of Industry and Trade in particular, for the longstanding support that they have provided to the steel industry.

Innovation

OMK’s Engineering and Technology Centre in Vyksa celebrated its tenth anniversary in 2019. Our centre conducts 50 research and development projects every year, and has produced dozens of patents and innovations. Our specialists won last year’s Government of the Russian Federation Young Scientists Prize for Science and Technology after creating special grades of steel for pipe production. Ours is the only corporate centre in the country to have won such an award. Our second Engineering and Technology Centre is based in Ufa. Both centres have received several billion roubles in investment from OMK.

Sustainable development

At OMK we adhere strictly to sustainable development principles, ensuring that our team members work in comfortable, safe surroundings and receive a competitive salary. As we develop production, we are also working to improve living standards in the regions where we operate and to create a comfortable environment for our employees and their families. Among other important environmental, social and governance (ESG) initiatives implemented in 2019, OMK established anticorruption and compliance policies.

I am fully confident that we have chosen the correct path for our future development, and that we will continue to adhere to OMK’s long-term strategy. I would like to thank our clients and partners for their ongoing trust and support.

Anatoly Sedykh