OREANDA-NEWS. Slab, hot-rolled and cold-rolled steel prices in Q1 2007 were below the record levels of Q4 2006 due to seasonal factors. The weak pricing environment negatively impacted NLMK’s financial results in Q1 2007 compared to the previous reporting period. Steel prices started to rebound only towards the end of Q1 2007.

Sales revenue, gross profit and operating profit increased in Q1 2007 compared to Q1 2006 due mainly to the growth of prices and sales volumes as well as changes to delivery terms. The lower growth rate of operating profit compared to gross profit was caused by increased SG&A expenses associated with changes to delivery terms in March 2006.

Net profit in Q1 2007 amounted to RUR 9,5 billion. The 73,3% net profit increase in Q1 2007 compared to Q4 2006 is primarily attributable to impairment losses and accretion expense on asset retirement obligations of the Prokopievskugol Group of Companies. Net profit decreased by 37% in Q1 2007 compared to Q1 2006 caused by lower gains on financial investments. The proceeds from the divestment of NLMK’s stake in Lebedinsky GOK in Q1 2006 substantially exceeded the proceeds from the divestment of energy assets in Q1 2007.