OREANDA-NEWS. VSMPO - AVISMA Corporation reported revenues for the first half of 2007 of 14.127 billion rubles, a 5% decrease from 14.918 billion rubles in the first half of 2006. Gross profit was 5.9 billion rubles compared to 6.3 billion rubles and sales profit was 4.393 billion rubles compared to 4.940 billion rubles in the same period of last year. Net profit decreased to 2.688 billion rubles from 3.654 billion rubles in the first half of 2006.

The decrease in revenues and, accordingly, in net profit in the first half of 2007 compared to the first half of 2006 can be explained by the fact that VSMPO - AVISMA Corporation has changed its accounting policy since January 1, 2006. Furthermore, the financial results of the Company were negatively impacted by lower ferrotitanium market prices and lower sales of ferrotitanium in the period under report. In the first half of 2007 sales of ferrotitanium were 12% of sales in the same period of last year.

According to the accounting policy the Company used before 2006 a product was recognized as sold if it was shipped in case of domestic sales and if a payment was collected in case of export sales. Therefore, revenues from export sales were recognized with a delay because such amounts were only included in the revenues after payments have been received at the Company’s bank account. In 2006 Federal Law No. 58 of June 6, 2005 came into effect amending the Russian Tax Code to recognize all shipped products as sold for the accounting purposes.

The change in accounting of export revenues resulted in higher sales amounts in 2006. According to the new accounting rules revenues from sales in the first half of 2006 were 14.918 billion rubles, including 3.111 billion rubles of “pending” revenues from the products shipped for export and not paid for in 2005.
Revenues from sales in 2007 included only the products shipped in the reporting period, therefore the amounts of revenues, gross profit and net profit are lower than in 2006.

The major strategic goal of VSMPO – AVISMA Corporation in 2007 is to further develop its titanium production, i.e. increase output of ingots, forgings, billets and flat-rolled products, develop engineered products segment and produce higher value-added titanium products.