Severstal Eyes Share Buyback

Severstal may buy back shares to buoy its stock price following a 44 percent slump since May, Lehman Brothers Holdings said Friday.

Severstal told analysts at a briefing that it was considering a buyback, Vladimir Zhukov, a Moscow-based analyst at Lehman, said Friday. Severstal spokeswoman Olga Antonova would not comment.

The company "acknowledged that it is considering a share buyback to support the stock with no exact details provided,'' Zhukov wrote in a research note.

Severstal fell 18.62 rubles, or 4.68 percent, to close at 379.51 rubles in Moscow trading, down from a record 677.97 rubles May 16 and giving the company a market value of 382 billion rubles ($15 billion). Its London-listed stock dropped 61 cents, or 4 percent, to $14.79, the lowest since August 2007, after Merrill Lynch cut its price estimate for the company's shares. Merrill reduced its price estimate for the shares 5.7 percent to $35, saying steelmakers may have to respond to pressure from the Russian government about raw-materials costs by lowering prices.

On Thursday, Severstal said first-half net income rose to $1.92 billion from $1.15 billion a year earlier. The company will deliver "strong'' full-year earnings as price increases are sustained, chief executive Alexei Mordashov said in a statement. "We see strong pricing for the rest of the year," Mordashov said on a conference call, adding that Severstal saw opportunities in Europe for acquisitions and "should be more active in Asia.''