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July 31, 2009

OJSC “Magnitogorsk Iron and Steel Works” (MMK) announces its Q2 2009 financial results under Russian Accounting Standards (RAS)

The results reflect MMK operations only and do not relate to subsidiaries or affiliated companies.

Key Q2 2009 operational highlights

· Crude steel output 2.2 mt (+4% to Q1 2009)

· Finished steel products output 1.9 mt (+2 thousand tons to Q1 2009)

Key financial highlights

The production volume in Q2 2009 stayed at the level of Q1 2009. The Company’s actions were aimed to support the low level of cash-cost and to optimize the structure of production portfolio. As the result, neither commercial billets nor slabs were produced; the share of downstream products in Q2 2009 grew by 4% to Q1 2009 and amounted to15%.

The share of domestic sales stood at 55% and accounted for 67% of total sales of steel products. The share of other products sales amounted to 5%.

Key Q2 2009 Profit & Loss statement figures

· Q2 2009 revenues stood at the level of Q1 2009 and amounted to RUR 28 bn

· Operating income went up by RUR 333 mln to RUR 4.7 bn

· Net income increased by RUR 4.9 bn and stood at RUR 8.8 bn (up by 127% compared to Q1 2009).

The growth of net income in Q2 2009 compared to Q1 2009 is attributed to the following factors:

· operating income growth mainly due to 3.2% decrease of production costs for 1 ton of steel products

· increased results of financial investments revaluation compared to Q1 2009 as the result of growth of market prices for Russian and foreign entities’ securities in possession of MMK.

Balance sheet as of June 30, 2009(compared to balance sheet as of January 01, 2009)

Total assets amounted to RUR 215.5 bn

The balance sheet value of non-current assets grew by 19% compared to Jan 01, 2009 in the result of:

· implementation of investment programme - by RUR 17.6 bn

· positive revaluation of long-term investments - by RUR 8.7 bn

Current assets value decreased by 23% due to the following:

· decrease of receivables by RUR 3.2 bn

· decrease of inventories by RUR 5.8 bn

Cash amounted to RUR 8.7 bn. Long-term liabilities increased by 81% (comparing to balance as of Jan 01, 2009) to RUR 34.6 bn as the result of the long-term investment programme implementation. Short-term liabilities went down by 51% to RUR 21.7 bn due to decrease of payables and repayment of credits.




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