Transient profitability decline. Optimistic outlook for 2008.

· Crude steel output at MMK grew by 8.1% compared to 4Q2007. Finished steel products output increase by 5.8% and amounted to 3,287 thousand tons.

· Following the international market trends, average price for 1Q2008 grew by 9% and paved the way for even stronger growth in April-May 2008.

· Sales of MMK parent company rose by 11.7% and amounted to USD 2.188 mln. At the same time total MMK Group sales amounted to USD 2.169 mln, showing a 6% increase.

   The reason for parent sales to exceed consolidated MMK Group sales is the delay of goods in transit on their way to end-customers. The delay was caused by adverse weather conditions at export seaports, which resulted in decreased revenues of MMK Group traders.
   Earnings were affected for the same reason, e.g. MMK (parent company) 1Q2008 EBITDA amounted to USD 504 mln, which is quite in line with 4Q2007 result of USD 506 mln. At the same time consolidated EBITDA of MMK Group for 1Q2008 is USD 465 mln.
   Operating income of MMK Group came to USD 393 mln (or 18.1% of sales) showing a 13.2% decrease compared to 4Q2007.
   Consolidated net income of MMK Group for 1Q2008 decreased by 28.5% totaling USD 271 mln (USD 0,024 per share), net margin coming to 12.5%. Net income decrease is accounted for by a one-off income tax which was accrued because of change in functional currency (from USD to RUR).
   Comprehensive income for 1Q2008 amounted to USD 477 and includes revaluation of Fortescue Metals Group shares and the effect of functional currency change.
   Despite significant growth of raw materials prices, MMK Group EBITDA margin shrank by 4 points only to 21.4%.
   Financial condition of MMK Group is characterized by high liquidity levels and low dependence on external financing.
   Acquisitions of property, plant and equipment, as well as subsidiaries and affiliates in 1Q2008 amounted to USD 733 mln.
   Dividend pay-out for MMK shares (excluding dividends for treasury shares) made up USD 6 mln.

   In 2Q2008 we expect increased earnings volume and margin level due to the following reasons:

   o   Decreased volumes of goods in transit;

   o   Continued steel prices growth supported by international pricing environment, allowing to compensate for raw materials prices growth.

   Growth factors for the year of 2008 will be:

   o   Increased production and sales volumes;

   o   Strong and sustainable demand for steel products in the domestic market;

   o   Consistent implementation of a comprehensive investment programme to maintain high profitability levels.

   Consolidated financial statements for 1Q2008 under US GAAP is to be found at: https://www.mmk.ru/eng/invrelations/b_reports/index.wbp

   Presentation of the results is to be found at: https://www.mmk.ru/eng/invrelations/presentations/index.wbp