MMK.L Regulatory News (MMK)

15 June 2012

Magnitogorsk Iron and Steel Works

HIGHLIGHTS

Ø MMK Group sales for Q1 2012 were USD 2,425 million, up 8% q-o-q.

Ø Cost of sales in Q1 2012 was USD 2,099 million, up 6% q-o-q.

Ø EBITDA for Q1 2012 was USD 293 million, up 44% q-o-q. This was due mainly to an 18% increase in the EBITDA of the Russian steel segment and a smaller EBITDA loss from the Turkish steel segment.

Ø Net profit for Q1 2012 was USD 14 million, compared to a USD 67 million loss in 4Q 2011. This was due mainly to a recovery in prices for finished products during the first quarter and lower costs for major raw material inputs.

MMK GROUP CONSOLIDATED INCOME STATEMENT HIGHLIGHTS (USD MLN)

Ø Revenue growth of 8% in Q1 2012 q-o-q was driven mainly by higher sales volumes in the quarter at the Magnitogorsk site (8%) and MMK Metalurji (9%), and a recovery in prices for finished products during the first quarter.

Ø The average price of finished products in Q1 2012 increased insignificantly from Q4 2011, to USD 705. This was due mainly to a recovery in demand and prices for steel on the domestic and export markets during the quarter, and also by a higher proportion of shipments of finished products going to the domestic market, which has a price premium to export markets.

Ø Cost of sales in Q1 2012 rose 6% q-o-q to USD 2,099 million, due to an increase in sales volumes in the quarter. However, the cost of sales rose more slowly than growth in revenue over the period.

Ø Lower prices for the main raw material inputs during Q4 2011 and Q1 2012 contributed to a reduction in the cash-cost of slabs by more than 11% to around USD 442 (compared with a peak of USD 495 per ton in Q2 2011).

Ø Operating profit for Q1 2012 was USD 33 million, compared to an operating loss of USD 47 million in 4Q 2011.

Ø EBITDA for Q1 2012 was USD 293 million; the EBITDA margin was 12.1%. EBITDA grew by more than 44% in Q1 2012 q-o-q, due to higher sales volumes and recovering prices for steel, and a reduction in raw materials costs. Improvements to the output mix (a 4pp increase in the share of high value added products to 40%) supported the Company's profitability.

Ø A further positive effect came from the significant reduction in the EBITDA loss at MMK Metalurji.

Ø Net profit for Q1 2012 was USD 14 million, compared to a USD 67 million loss in 4Q 2011. The loss at MMK Metalurji continued to have a negative effect on net profit for the period. One-off factors affecting net profit for the period included a foreign exchange loss (USD 89 million).

BALANCE SHEET AND CASH-FLOW HIGHLIGHTS

Ø Total assets as of 31 March 2012 were USD 17,453 million, up 7% from 31 December 2011.

Ø PP&E rose by 8% in Q1 2012 from the end of the previous financial year, and stood at USD 12,680 million at the end of the period.

Ø Despite higher output of finished products in Q1 2012 q-o-q, MMK reduced inventory during Q1 2012 q-o-q by 7%, to USD 1,660 million. This was due to reduced inventories of raw materials in the Company's warehouses, as well as sales of reserves of finished products built up at shipment points at the end of 2011.

Ø Total debt at the end of Q1 2012 stood at USD 4,246 million, down USD 170 million from the end of FY 2011.

Ø Cash and cash equivalents stood at USD 197 million as of 31 March 2011, which together with highly liquid assets amounting to USD 990 million fully covers the Company's short-term debt (USD 1,171 million).

Ø Total capital expenditure (capex) during Q1 2012 was USD 230 million. The Company's major investment projects for 2012 are completion of the 2,000 Cold Mill Complex and upgrades and repairs to the 2,500 Hot Mill.

MMK GROUP OPERATIONAL HIGHLIGHTS

Ø MMK's crude steel output in Q1 2012 was 3.4 million tons (+10% q-o-q).

Ø MMK's finished steel products output in Q1 2012 was more than 3 million tons (+10% q-o-q).

Ø MMK Group's total output of high value-added (HVA) products increased by 17% q-o-q in Q1 2012 to 1,199 thousand tons.

* Including processing of MMK products

MMK steel operations in Russia

Ø Finished steel products output in Q1 2012 was 2,766 thousand tons (+5% q-o-q). This was due mainly to a recovery in demand for finished products in the company's priority sales markets, and also the introduction of new products.

Ø MMK's HVA steel products output in Q1 2012 amounted to 939 thousand tonnes, up 16% q-o-q.

Ø MMK shipped 2,033 thousand tons of finished products to the domestic market in Q1 2012, up 22% q-o-q. The domestic market accounted for 73% of MMK's shipments during the period.

Ø HVA products accounted for 43% of MMK's domestic sales in Q1 2012.

Ø MMK's main end-consumers on the domestic market are pipemakers, machine builders and carmakers, which together accounted for about 50% of shipments in Q1 2012 (excluding shipments to CIS countries).

Ø MMK's domestic sales are focused in the Urals and Volga regions. Shipments to these regions accounted for 66% of domestic shipments and 49% of total shipments in Q1 2012.

Ø In monetary terms, shipments to Russia and the CIS accounted for 80% of total steel products sales in Q1 2012.

Ø MMK export shipments totaled 732 thousand tons in Q1 2012. The largest export markets for MMK in the period were the Middle East, Asia and the Far East, and Europe.

MMK steel operations in Turkey

Ø MMK Metalurji's finished steel products output in Q1 2012 was 253 thousand tons (+9% q-o-q).

Ø MMK Metalurji's revenue in Q1 2012 was USD 215 million, up 31% q-o-q.

Ø MMK Metalurji recorded an EBITDA loss of USD 18 million in Q1 2012, compared with a loss of USD 67 million in Q4 2011. This improvement was due to a recovery in prices for finished products on the Turkish market during Q1 2012 and processing of expensive inventory of scrap that accumulated during late Q3 and early Q4 2011.

BELON OPERATIONAL HIGHLIGHTS - ММК GROUP COAL SEGMENT

Ø Production of coking coal concentrate in Q1 2012 was 776 thousand tons. Production in Q4 2011 was 882 thousand tons.

Ø Revenue in the coal segment for Q1 2012 was USD 130 million, down 18% q-o-q. This was due to lower market prices for coal in Q1 2012 and reduced output caused by work on the reinstallation of walls.

Ø EBITDA for Q1 2012 fell slightly q-o-q to USD 42 million providing the EBITDA margin of 32%.

MARKET OUTLOOK

Production of finished steel products in Q2 2012 in Magnitogorsk will remain at about the same level as in Q1 2012.

Average prices since the beginning of 2012 rose by 6-7%. At present prices are experiencing a correction, which is expected to continue into the middle of Q3 2012.

An expected increase in demand for steel in Russia in 2012, the introduction of new products at Magnitogorsk (cold-rolled Mill 2000) and MMK Metalurji reaching full production capacity will allow MMK Group to increase output of finished steel products compared with 2011.

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MMK management will hold conference call on June 15, 2012 at 3.00 pm Moscow time, 12.00 noon London time, 7.00 am New York time.

Dial-in number +7 3519 24 93 05. Password: 1234

IFRS financial statements are available at: http://eng.mmk.ru/for_investor/financial_statements/

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MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of higher value added products. In 2011 the company produced 12.2 million tonnes of crude steel and 11.2 million tonnes of commercial steel products. MMK Group had sales in 2011 of USD 9,306 million and EBITDA of USD 1,336 million.

ContactsAndrey Serov

tel. +7 (3519) 24-52-97,

email: serov.ae@mmk.ru

Communications department: