August M
Russia’s economic strain is showing fresh signs of stress after one of the country’s flagship industrial companies reported a sharp collapse in profitability. The results underline growing pressure on key sectors once considered pillars of resilience under sanctions.
The setback comes as demand weakens at home and global market forces squeeze prices.
Margins collapse
According to The Express, Severstal, one of Russia’s largest steelmakers, reported its lowest profit margin in 16 years, a level not seen since the global financial crisis of 2009.
The company said earnings before interest, taxes, depreciation and amortisation fell 42% in 2025 to 137.6 billion roubles ($1.8 billion) compared with the previous year. Revenue declined by 14%.
Severstal’s EBITDA margin dropped to just 19%, a sharp reversal for a company that has typically maintained margins above 30% in recent years.
Cooling demand
Chief Executive Alexander Shevelev linked the downturn directly to Russia’s slowing economy.
“Steel demand in Russia fell sharply as the economy cooled under the weight of high interest rates,” Shevelev said in a company statement.
He added that domestic demand for steel products fell 14% year on year, putting further pressure on prices and profitability.
Global pressure adds strain
Shevelev also pointed to weakness beyond Russia’s borders. A prolonged slump in China’s property sector has triggered record steel exports from China, weighing on global prices and intensifying competition.
That oversupply has spilled into markets that Russian producers rely on, limiting their ability to offset weaker demand at home.
Russia’s steel industry has long been among the most profitable globally, making the latest figures particularly striking for analysts watching the health of the broader economy.
Sanctions and slowdown
Severstal, owned by sanctioned billionaire Alexey Mordashov and employing around 50,000 people, has faced international restrictions since the start of Russia’s full-scale invasion of Ukraine.
Those measures forced the company to cut exports and rely more heavily on the domestic market.
But that market has cooled sharply. Russia’s economy slowed significantly last year for the first time since February 2022, as inflation surged and interest rates climbed to near-record levels.
Authorities are now scrambling to rein in prices, with signs of unease spreading across industries once seen as immune to prolonged pressure.
Warning sign
Analysts say Severstal’s results highlight how deepening economic headwinds are eroding even Russia’s strongest corporate performers. With demand falling, financing costs high, and export options constrained, the steel sector’s troubles may foreshadow wider pain ahead.
Sources: The Express
