Uralkali (Berezniki, Perm Territory) announces part of its 2008 results in accordance with Russian Accounting Standards (RAS).

Key Highlights:

• Net profit for 2008 was 29.48 billion roubles (390% increase on 2007)

• Net profit for Q4 2008 was 6.18 billion roubles (43% decrease from Q3 2008)

• 2008 asset value was 56.85 billion roubles (65% increase on 2007)

Uralkali attributes its 2008 financial performance to favourable market conditions in the first three quarters of 2008, a sound pricing policy and consistent cost control.

Strong financial performance enabled the company to increase investment by 80% to 9.52 billion roubles, ensuring stable production. Over the year the company reinvested its profits into two key areas: upgrading and maintaining of existing production, and introducing new production facilities. In 2008 5.5 billion roubles (a 50% increase on 2007) was invested in upgrading and maintaining existing production and 4.02 billion roubles (a 150% increase on 2007) was used to create new production facilities, including 2.24 billion roubles to develop the plant and mine at the 4th Mining Division, and 0.79 billion roubles to implement the energy programme.

Its stable financial position allowed the company to increase the average salary level of its staff in Berezniki by 33% from 17.843 roubles in 2007 to 23.727 roubles in 2008 (with the overall headcount increased to 8,747 employees in 2008). In 2008, the company was also able to increase its expenses for implementation of social and charity projects by 60% to 508 million roubles.

Total tax paid by the company grew fourfold to 8.24 billion roubles in 2008. During 2008 the company paid out the previously announced 2007 dividend of 4.03 billion. In September 2008, taking into account a positive market environment and expecting further performance growth, the General Meeting of Shareholders decided to pay an interim dividend of 49 billion roubles.

Due to the deteriorating global economic environment, in Q4 2008 Uralkali faced a sharp drop in demand for potash fertilizer, which adversely affected its output and financial performance. The tough situation in the potash market persisted in Q1 2009 and as a result Uralkali had to operate at 35% capacity, producing about 459 thousand tonnes of potassium chloride (against 1.25 million tonnes of potassium chloride produced in Q1 2008). Given the challenging global economic conditions, the outlook for the potash market remains unclear.

Uralkali intends to use the remaining part of its profits to sustain the company and its employees during the economic downturn until the demand in potash recovers. These funds will allow the company to avoid redundancies and maintain social investments programme, including 7.8 billion roubles payable to the federal and regional governments and OAO «Russian Railways» to reimburse the costs related to the Mine 1 accident. Furthermore, the company will use its 2008 proceeds to fund its current operations and repay loans, which totalled around 18 billion as of early 2009.