Russian steelmaker NLMK proposes new dividend policy

* Dividends to be paid quarterly

* Capex target set at $550 mln from $900 mln

* Sees Russian steel demand down 5-7 pct this year (Rewrites throughout, adds details)

By Maytaal Angel and Polina Devitt

LONDON/MOSCOW, March 30 (Reuters) - Russian steelmaker NLMK said on Monday it has proposed to boost its dividend and make payments on a quarterly basis, though it warned of an expected fall in steel demand in Russia in the second half of the year.

Like many Russian exporters, NLMK has benefited from a roughly 40-percent slide in the rouble since mid-2014, making exports more profitable. It has also benefited from improved operational efficiency and a decline in capital expenditure.

Management has proposed to the board that dividends be paid somewhere between 50 percent of net income and 50 percent of free cash flow if the ratio of net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) is 1.0 or less.

The payment may total somewhere between 30 percent of net profit and 30 percent of free cash flow if the net debt/EBITDA ratio exceeds 1.0, the company added in a statement.

It also said it aims to bring its medium-term annual capital expenditures target to $550 million from $900 million.

"We don't have a target of building cash reserves. Nothing stops us from going above the dividend policy target but the immediate objective is to reach the range and stay there, because we're talking about doubling the payout," Chief Executive Oleg Bagrin told reporters at the company's Capital Markets Day in London.

Bagrin said he sees steel demand in Russia falling between 5-7 percent this year, with imports of steel into Russia dropping to 3-4 million tonnes from about 6 million last year.

"Construction demand did better than many expected in Q4 and in Q1 demand is fairly robust ... we're concerned about the second half and end-year where project developments will be exhausted. We'll have to see what will be in the pipeline."

NLMK, controlled by Vladimir Lisin, said last week it expects net profit to be flat in the first quarter compared with the 2014 fourth quarter.

Bagrin said contrary to market speculation, it was unlikely the government will impose export duties on steel to protect domestic consumers from steel price inflation at home.

NLMK expects its exports this year will account for about 60-65 percent of its sales, versus about 50 percent last year. However, half its exports go to global subsidiaries, according to its investor presentation.

The company warned that restructuring its European operations should result in about 350 job cuts by 2015-16, though it should deliver some 20 million euros of savings.

"We'll pursue further rationalisation and restructuring in Europe and less efficient assets will be sold or closed," he said. (Editing by David Evans)