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MMK

May 17, 2002

The Magnitogorsk Iron and Steel Works Open Joint Stock Company (MMK) hereby announces its business and financial results for the first six months of 2002.

The following material events took place during the period:

The Russian metals industry journal "Metallosnabzheniye I Sbyt" ("Metals Supply") published a rating of the nation's best producers and sellers of ferrous and non-ferrous metals in the 1st six months of 2002, placing MMK fourth among the top five producers of long products and 2nd among the top five flats producers.

The MMK AGM on May 17, 2002, decided on increasing the Company's authorized capital up to RUR 10,630,221,600 by increasing the shares' par value.

In the 2nd quarter MMK made payments of proceeds to holders of MMK's interest-bearing documentary bonds for a total amount of RUR 24.2 million.

Russia's largest inner waterways shipping company "Volgotanker" (city of Samara) accounting for ab.5% of the nation's oil exports, switched to steel deliveries from MMK, turning down offers from "Severstal".

June of 2002 - opening of a water park in the Company-owned Abzakovo resort.

MMK's production performance in the first half of 2002

The Company continued to step up the volume of production, meeting the targets for the first half of the year. During that period the Company produced 4,670,000 tons of sinter and 2,560,000 of coke, and smelted 4,585,000 tons of iron and 5,435,000 of steel.

Compared to the 1st half of 2001, MMK raised its production levels by:

  • 4.6% for sinter
  • 3.9% for coke
  • 7.8% for iron
  • 7.0% for steel
  • 8% for steel.

The structure of commercial products has shifted towards a greater share of flats and other higher value-added products, a sign of an improving sales trend.

This shift can demonstrated by the following table:

  1st half of 2002 1st half of 2001
- billets and slabs 418.8 606.5
- long products 649.6 622.9
- flats 3 152.9 2 741.1
- down stream products 540.4 431.6
Total 4 761.6 4 402.2

57% of all steel products was produced for export.

The following financial reports of MMK were prepared according to Russian accounting standards.

BALANCE SHEET

  As of 31/12/2001 (in RUR million) As of 31/12/2002 (in RUR million)
ASSETS    
Non-current assets 27 830,03 28 533,03
Current assets, including 16 560,45 19 550,11
Inventories 9 416,62 8 548,80
Receivables 4 640,40 5 911,74
Cash and highly liquid assets 2 503,44 5 089,57
TOTAL 44 390,48 48 083,14
LIABILITIES    
Equity 28 471,18 29 725,21
Liabilities, including 15 919,30 18 357,21
Long-term liabilities 2 015,72 7 892,77
Current liabilities 13 903,58 10 464,44
TOTAL 44 390,48 48 083,14

During the accounting period the total assets of the Company grew by 8.3% against the period beginning, signaling a build-up of the Company's fixed assets. Non-current assets grew by RUR 703 million, or by 2.5%. The 18% growth of the current assets can mainly be attributed to an 11% increase of cash and highly liquid assets.

On the liabilities' side, the Company's equity increased by RUR 1.254 billion, or 4.4%, with liabilities up by RUR 2.438 billion, or 15.3%. There is a trend towards an increasing proportion of long-term liabilities, which is a positive factor for the balance sheet.

FINANCIAL RESULTS

  1st Q of 2002 (in RUR million) 1st 6-months of 2002 (in RUR million)
Sales revenues 11 682 25 819
Cost of sales 10 214 21 425
Selling costs 170 368
Sales profit (loss) 1 298 4 026
Operating income and expenditures - 349 - 1 067
Non-operating income and expenditures - 1 022 - 1 342
Profit (loss) before tax - 73 1 617
Profit and other similar taxes 171 272
Net profit - 244 1 345

In the 2nd quarter of 2002 the loss incurred in the 1st quarter due to the transition, starting from 01.01.2002, to a new Chart of Accounts as ordered by Regulation # 94 of the Ministry of Finance dated 31.10.2000, and the adoption of Chapter 25 of the Russian Federation Tax Code ("Tax on an Enterprise's Profit"). The net profit for 1st 6 months of 2002 totaled RUR 1.345 billion.

 

 

 

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