OREANDA-NEWS. November 16, 2007. The Company’s revenues decreased 5% down to 20,90 bln. rubles during January – September of 2007 from 21,97 billion rubles during the same period in 2006, reported the press-centre of VSMPO – AVISMA.

Gross profit was 8,94 bln. rubles compared to 9,49 bln. rubles and sales profit was 6,61 bln. rubles compared to 7,44 bln. rubles. Net profit decreased to 3,77 bln. rubles during January – September of 2007 from 5,35 billion rubles during the same period of 2006.

The decrease in revenues and, therefore, net profit for the first nine months of 2007 compared to the same period of 2006 can be explained by the fact that VSMPO – AVISMA Corporation has changed its accounting policy since January 1, 2006. Also, the results were impacted by the change in the dollar to ruble exchange rate.

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. For the first nine months of 2007 sales of ferrotitanium were 25% of sales for 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 in 2006. Revenues from sales in 2007 included only the products shipped during the reporting period, therefore the revenues, gross profit and net profit are lower than in 2006.

The Company sells over 70% of its products for export. As the main currency of contracts is US dollar, the decline in the dollar to ruble exchange rate significantly impacted sales revenues in the period under report.

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.