OREANDA-NEWS. September 5, 2007. Big overhaulings were the main peculiarity of the second quarter of 2007 at “Ilyich” works. The work collective of the enterprise carried out the set tasks, without suspending any of the existing programs, like technical modernization, social protection of the workers or rendering aid to the city and regions. The supreme goal for the second six months is to recover financial losses, incurred during the overhaulings and make necessary preparation for the second stage of production modernization program.

Large-scale erection work was carried out in the second quarter of 2007 at the blast-furnace shop, oxygen converter and limestone and kiln shops, leading to a drop in cast iron and steel production (see the diagram on page 4). Hence the works’ revenue also dropped. At the same time it was necessary to allocate enormous monetary, material and labour resources for financing and execution of these overhaulings, amounting to 270 million of hryvnas.

The works managed to fulfill the set tasks, the results of the financial and production activities of the public joint stock company for the second quarter of 2007 being a proof of that.
Production growth of the works in comparable prices in the first six months of 2007 was 4.9%, as compared to the same period of the previous year.

Increase in the price of energy carriers.
The results achieved could have been better, but for the increase in the prices of energy carriers, raw and other materials. So, in the second quarter of this year the price of iron ore materials increased by 15-18% as compared to January 2007, the price of ferro-alloys is 25% higher, the price of metal scrap increased by 135, petrol by 34%, electric power by 8%. “Ukrgasenergo” company included since May 1st, storage expenses into the price of gas, which the company supplies, increasing its price by 20 hryvnas per 1000 cubic meters. Now the works have to pay for gas extra two million hryvnas.

Technical modernization.
124 million of hryvnas were invested into the program of the works’ construction and reconstruction, for the second quarter of the year under review, including 43,4 million into the construction of pulverized coal injection unit at the blast-furnace shop, 26.9 mln into the construction of the heating furnace at “1700” sheet rolling mill and 28.7 million into the construction of the third continuous casting machine. Investment of money into technical modernization alongside with implementation of some organizational and technical measures raises the works’ competitive strength at the ferrous metals market and brings the workers’ confidence in their guaranteed future.

Total investments of the works into capital construction, capital repairs and reconstruction, modernization and purchase of new facilities reached in the second quarter of 2007 392 million of hryvnas and 677.5mln hryvnas since the beginning of the year, this figure exceeds by some 111 mln. The investments made in the first six months of the previous year.

Development of social infrastructure.
Social protection of the workers and pensioners is one of the main tasks of the company’s activities.1,010.9 mln hryvnas was spent on workers’ wages, since the beginning of the current year, including payments made into the pension fund and other funds. The average monthly salary of the workers in industrial sectors was increased by 29.7%, as compared to the same period of the previous year. The main reason of such growth is application of enlarged wage scales and increased wages, paid for work on holidays and days-off, during the period of reconstruction work of No4 blast-furnace and No 1 converter. 89.1 mln of hryvnas was spent on improvement of workers’ and their family members’ health, making the food at the works’ canteen cheaper and sales of domestic fuel at reduced prices and other social measures.
71.5 mln of hryvnas was spent at that time on infant schools and kindergartens and social, cultural and utility objects which the works own (recreation bases, rest homes, children recreation centers etc.). In the first half of this year 5 mln hryvnas were paid as material aid for retired workers and services rendered to them. The works’ housing program is also being implemented, the workers are granted flats, according to the waiting list. In this year completion of No23 building at “Vostochniy” residential area, comprising 189 flats is planned, as well as a building with 60 flats at Kamensk settlement. Social programs are implemented in due time in the agricultural sector, due to the works’ support.

Payments into the budget
The public joint stock society always ensured full and timely payments into the budget and state owned special funds. Since the beginning of the year, 720 mln. hryvnas were paid into the state budget, exceeding the same period of the previous year by 7.4%. The bulk of these donations were made in the second quarter of the year. Nearly 15% of the paid costs (excluding allocations into the pension fund) came to the city’s budget. The works are one of the biggest tax and duty’s payers among the Ukrainian enterprises, paying nearly 20% of the aggregate amount of budget payments in iron and steel industry.

Growth of commodities output
High indices were reached this year by the associated enterprises, under the corporate management of ’Ilyich” PJSC: Komsomolskoye mining enterprise, “Umanfermash” plant, Kondratyevskiy refractory materials plant. During the first six months the volume of commodities output reached the amount of 244.3 mln. hryvnas, bringing 54.65 mln. profit, after its sale. Growth in production volumes at these enterprises is estimated to be 20%, as compared to the same period of the previous year.

These are the results of the shareholders’ society in the second quarter and the first six month of 2007. For the second half of this year the society has the supreme goal to recover the financial losses, incurred by the enterprise during the period of capital repairs of No4 blast furnace and No1 converter and make necessary preparations for implementation of the next stage of production modernization program-capital repairs of the facilities of rolling mills.