OREANDA-NEWS. Magnitogorsk Iron & Steel Works announces its consolidated IFRS financial statements for Q4 2012 and FY 2012.

HIGHLIGHTS

- MMK Group sales for 2012 totalled USD 9,328 million, an increase of 0.2% y-o-y.

- Cost of sales in 2012 amounted to USD 7,881 million, up 1.6% y-o-y.

- EBITDA for 2012 was USD 1,356 million, up 1.5% from 2011. The main EBITDA growth factor for MMK Group was growth in the Russian steel segment of more than 13%.

- The net loss for 2012 decreased by nearly 25% y-o-y and amounted to USD 94 million. MMK GROUP CONSOLIDATED INCOME STATEMENT HIGHLIGHTS (USD MLN)

2012

2011

%

Q4 2012

Q3 2012

%

Revenue

9,328

9,306

0.2%

2,068

2,319

-10.8%

Cost of sales

-7,881

-7,756

1.6%

-1,751

-1,911

-8.4%

EBITDA*, of which

1,356

1,336

1.5%

296

398

-25.6%

Steel segment (Russia)

1,343

1,187

13.1%

303

400

-24.3%

Steel segment (Turkey)

-75

-66

13.6%

-18

-31

-41.9%

Coal segment

86

222

-61.3%

12

27

-55.6%

Consolidation effect

2

-7

-

-1

2

-

EBITDA margin

14.5%

14.4%

14.3%

17.2%

Profit for the period

-94

-125

-24.8%

-141

82

-

- Growth in consolidated revenue for 2012 was largely driven by higher production volumes of finished steel products and improvements to product structure.

- Revenue decline in Q4 2012 of 11% q-o-q was due to a seasonal slump in demand on the Russian market and consequently lower volumes of finished products shipped from the Magnitogorsk facility in a weaker price environment.

- Cost of sales of finished products in 2012 increased 1.6% y-o-y largely due to an increase in amortization following the launch of new production capacity and change in work in progress, finished goods and goods in transit. Despite growing sales volumes raw materials used in 2012 decreased 2.9% y-o-y and totalled USD 5 621 million.

- The decline in the cost of sales in Q4 2012 of 8.4% q-o-q was due to lower production of finished steel products and also to a substantial fall in prices for key raw materials.

- Favourable price dynamics for key raw materials throughout Q4 2012 helped to continue lowering expenses on production of finished products. The cash cost of slab in Q4 2012 decreased 3% q-o-q to USD 374.

- MMK Group's operating profit for 2012 decreased by 27% y-o-y and totalled USD 266 million. This was due to the increase operating loss for the steel segment in Turkey in 2012 by USD 50 million and a decline in operating profit for the coal segment by USD 132 million.

- At the same time, operating profit in the Russian steel segment in 2012 grew by more than 20% y-o-y, and totalled USD 439 million. This was due to higher production volumes, lower cost of sales and improved product structure.

- MMK Group EBITDA for 2012 increased by 1.5% y-o-y to USD 1,356 million, providing a margin of 14.5% (0.2 percentage points more than in 2011). The main reason for the increase in EBITDA was profitability growth in the Russian steel segment (+13.1%).

- MMK Group EBITDA for Q4 2012 was USD 296 million.