Presentation of the OJSC MMK Group 1H 2008 US GAAP Financial - - PowerPoint PPT Presentation

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Presentation of the OJSC MMK Group 1H 2008 US GAAP Financial - - PowerPoint PPT Presentation

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Presentation of the OJSC MMK Group 1H 2008 US GAAP Financial Statements The presentation contains selected data from the financial statements of MMK Group. Detailed information is provided in the financial statements of the Group 1H 2008

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Presentation of the OJSC MMK Group 1H 2008 US GAAP Financial Statements

The presentation contains selected data from the financial statements of MMK Group. Detailed information is provided in the financial statements of the Group 1H 2008 prepared according to US GAAP.

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group Operations and Income Statement

* EBITDA = Operating income + Depreciation of assets + Loss on disposal of fixed assets

581 595 489 309 581 1,315

Change

30.0% 1,046 41.1% 1,432 21.8% 760 21.9% 764 28.0% 974 3,484

2Q 2008

30.1% 26.7% 21.4% EBITDA margin 306 1,205 1,511 465 EBITDA* 26.1% 40.4% 38.6% Revenue margin 1,239 1,045 2,284 837 Comprehensive income 21.7% 18.2% 12.5% Revenue margin 165 866 1,031 271 Net income 28.0% 25.1% 21.0% Revenue margin 301 1,119 1,420 455 Income before income tax and minority interest 26.9% 24.2% 18.1% Revenue margin 290 1,077 1,367 393 Operating income 1,653 4,000 5,653 2,169 Revenue

Change 1H 2007 1H 2008 1Q 2008

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group Key Performance Indicators

200 400 600 800 1000 1Q 2Q 3Q 4Q 0% 10% 20% 30%

2006 2007 2008 Operating Income / Proceeds 2008 Operating Income / Proceeds 2006 Operating Income / Proceeds 2007

500 1000 1Q 2Q 3Q 4Q 0% 10% 20% 30%

2006 2007 2008 EBITDA / Proceeds 2008 EBITDA / Proceeds 2006 EBITDA / Proceeds 2007

1000 2000 3000 1Q 2Q 3Q 4Q

2006 2007 2008

Sales proceeds, USD m Operating income, USD m EBITDA, USD m Net income, USD m

200 400 600 800 1Q 2Q 3Q 4Q 0% 5% 10% 15% 20% 25%

2006 2007 2008 Net Income / Proceeds 2008 Net Income / Proceeds 2006 Net Income / Proceeds 2007

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group’s Key Financial Indicators

1H 2008

58% 32% 10%

OJSC MMK Steel traders* Other companies

MMK Group’s Sales, USDm MMK Group’s Sales in USD

1H 2007 60% 31% 9% * ММК Steel Trade AG ММК Trading AG 4,000 365 1,252 2,383

1H 07

2,169 221 584 1,364

1Q 08

5,653 3,484 Total proceeds 592 371 Group’s other companies’ proceeds 1,792 1,208 Group’s steel traders’ proceeds 3,269 1,905 OJSC MMK’s proceeds

1H 08 2Q 08

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group’s Key Financial Indicators

Proceeds by type of product, USDm Proceeds by type of product in USD

1H 2008

8% 8% 18% 9% 57% Billets & Slabs Flats Longs Downstream products Other products and services

1H 2007

10% 23% 6% 3% 58%

4,000

254 905 417 2,293 131

1H 07

5,653 2,169 3,484 Total proceeds

442 167 275 Other products and services 1,040 430 610 Downstream products 536 252 284 Long products 3,172 1,135 2,037 Flat products 463 185 278 Billets and slabs

1H 08 1Q 08 2Q 08

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group’s Operating Costs’ Structure

MMK Group’s operating costs, USDm MMK Group’s operating costs in USD

1H 2007

2% 2% 4% 9% 3% 80%

1H 2008

1% 1% 5% 9% 3% 81%

COGS (excl. of depr. & amort. ) Depreciation and amortization Selling and distr. expenses Administrative expenses Social expenses Other operating income and loss

  • 17

29 40 47 121 256 99 2,348

1H 07

  • 32

11 48 40 211 376 133 3,499

1H 08

  • 1

12

Loss on disposal of plant and equipment

24 24

Taxes other than income tax

2

  • 34

Other operating income and loss

18 22

Social expenses

85 126

Administrative expenses

162 214

Selling and distribution expenses

73 60

Depreciation and amortization

1,413 2,086

Cost of products sold (excl. of amortization and depreciation)

1Q 08 2Q 08

Total: 4,286 USDm Total: 2,923 USDm

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  • 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cost Structure Analysis

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cost of Goods Sold Breakdown, MMK Group

Overheads: (0.2)% Other: 0.9% Salaries: 9.4% Raw materials costs: 86,9% Inventory changes: (1.4%) Overheads: 2.3% Other: 1.4% Salaries: 10.1% Raw materials costs: 86.9% Inventory changes: (0.7)%

1H 2008 1H 2007 Total: 3,499 USD m Total: 2,348 USD m

MMK’s Material Costs in USD m

Raw materials costs: 91.3%

Scrap 27,8% Other main materials 14,5% Auxiliary materials 13,6% Fuel from outside sources 6,2% Power from outside sources 2,5% Sinter 9,1% Pellets 10,2% Coals 16,1% Fuel from outside sources 5,3% Power from outside sources 2,3% Sinter 8,5% Pellets 10,8% Auxiliary materials 9,0% Other main materials 11,7% Scrap 31,0% Coals 21,4%

1H 2008 1H 2007

  • 1. Includes only OAO MMK raw material expenses, which account for 90% of MMK Group costs

(1)

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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MMK Group’s Balance Sheet, USD m

9 382 6 824 87 347 326 1 224 1 921 320 230 550 9 382 1 212 3 879 5 091 726 946 691 393 1 279 256 4 291 31.12.2007 2 477 2 046 48 137

  • 24
  • 75

14 384

  • 15

369 2 477 1 036 1 612 2 648

  • 43

104 173

  • 26
  • 929

550

  • 171

Change 26,4% 11 859 Total liabilities and shareholders’ equity 30,0% 8 870 Shareholders’ equity 55,2% 135 Minority interest 39,5% 484 Other accounts payable and current liabilities

  • 7,4%

302 Accounts payable

  • 6,1%

1 149 Short-term borrowings 0,7% 1 935 Current liabilities, including 120,0% 704 Other long-term debt

  • 6,5%

215 Long-term loans and capital lease obligations 67,1% 919 Long-term debt, including 26,4% 11 859 Total assets 85,5% 2 248 Other non-current assets 41,6% 5 491 Property, plant and equipment 52,0% 7 739 Non-current assets, including

  • 5,9%

683 Other receivables and current assets 11,0% 1 050 Inventories 25,0% 864 Accounts receivable less allowance for doubtful accounts

  • 6,6%

367 Short-term investments

  • 72,6%

350 Short-term bank deposits 214,8% 806 Cash and cash equivalents

  • 4,0%

4 120 Current assets, including % 30.06.2008

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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806 256

  • 69
  • 361
  • 330

34 245 1031

MMK Group’s Cash Flows

Change of cash balance during the 1H 2008, USD m

Balance at begin. of period Net income Adjustments for non-cash

  • perations

Change in working capital Investing activities* Financing activities Balance at end of period

* - Investing activities: USD 1,079 mln. – Purchase of property, plant and equipment and intangible assets;

Effect of exchange rate changes

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MMK Group’s Financial Position Indicators

Current liquidity Debt / EBITDA EBIT / Interest Total debt / Equity

1000 2000 3000 4000 2005 2006 2007 1H 2008 1 2 3 4 Current assets Current liabilities Current assets/Current liabilities 500 1000 1500 2000 2500 3000 3500 2005 2006 2007 1H 2008* 0,2 0,4 0,6 0,8 Debt EBITDA Debt/EBITDA 500 1000 1500 2000 2500 2005 2006 2007 1H 2008 5 10 15 20 25 30 35 EBIT Interest EBIT/Interest 2000 4000 6000 2005 2006 2007 1H 2008 0,2 0,4 Total debt Equity Total debt/Equity * EBITDA = 1H 2008 EBITDA * 2

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OJSC MMK’s Key Production Indicators

539 6,476 7,015

  • 180

3,598 3,418 Crude steel 311 1,518 1,829

  • 52

941 889

  • Incl. EAF steel

228 4,958 5,186

  • 128

2,657 2,529 BOF steel 409 304 Change 4,652 2,619 1H 2007 5,060

  • 165

2,613 2,448 Pig iron 2,923

  • 11

1,467 1,456 6% humidity coke 1H 2008 Change 1Q 2008 2Q 2008 Description

thousand tons

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Historical Structure of OJSC MMK’s commercial products’ mix

94 4,017 4,111 65 2,023 2,087 Flat products

  • 23

732 709 12 349 361 Downstream products 483 5,951 6,434

  • 140

3,287 3,147 Commercial products 1 413 Change 935 266 1H 2007 936

  • 34

485 451 Long products 679

  • 183

431 248 Billets and slabs 1H 2008 Change 1Q 2008 2Q 2008 Description

thousand tons

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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OJSC MMK’s Historical Product Mix By Market

Changes in domestic shipments Export shipments

50% 54% 60% 64% 66% 50% 46% 40% 36% 34%

0% 50% 100% 2005 2006 2007 1H 2007 1H 2008 Domestic market Export

Domestic sales’ growth in tons Changes in shipments’ structure in tons

2000 4000 6000 8000 10000 2005 2006 2007 1H 2007 1H 2008

Billets & slabs Longs HRC CRC Downstream products

10,201 11,346 12,203 5,951 6,434

2Q 2008 25% 5% 55% 15%

Billets & slabs Longs HRC CRC Downstream products

1Q 2008 1% 35% 4% 14% 46%

Total: 981 kt Total: 1,222 kt

2Q 2008

21% 52% 13% 14%

Billets & slabs Longs HRC CRC Downstream products

1Q 2008

50,5% 12,3% 23% 14,2% Total: 2,166 kt Total: 2,065 kt

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Presentation of the OJSC MMK Group 1H 2008 Financial Statements

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Contact Persons

Press Secretary Yelena Azovtseva email: azovtseva@mmk.ru tel: +7 3519 24 9082 Head of Investor Relations Service Yevgeny Kovtunov email: kovtunov@mmk.ru tel: +7 3519 24 9355 fax: +7 3519 24 9360