OREANDA-NEWS. On January 10, 2007 PSC VSMPO-AVISMA Corporation (“VSMPO-AVISMA” or “Company”) reported consolidated Net Income of $204,01 million for 2006, an increase of $129,4 million (173%) over 2005. All amounts reported are in US dollars, reported the press-centre of VSMPO-AVISMA Corporation.

Consolidated Sales, Gross Profit and EBITDA for 2006 are $1003,22 million; $478,13million; and $338,70 million respectively. Consolidated 2006 Sales increased $275,03 million or 38% over 2005. Consolidated Gross Profit and EBITDA increased $162,18 million (51%) and $177,56 million (110%) respectively over the prior year.

Commenting on the results for 2006, Alexander Sementsov, the Company Financial Director, said:

“Consolidated results of VSMPO-AVISMA Corporation include the operations of our production facilities in Russia and abroad, reported in accordance with US Generally Accepted Accounting Principles. In 2006, we earned the greatest profit in the history of our Company. The significant improvements in consolidated sales and earnings in 2006 were the result of favorable conditions in the world titanium markets for aerospace and industrial applications and increases in our production and shipments.

At the start of 2007, the Company began implementation of a large-scale investment program for production modernization and development of additional capacities. This program will continue through 2012. Financing of this program will be provided from a combination of borrowings and funds from internal cash flow. While demand for the Company?s products remains strong, we anticipate some decrease in our Gross Profit Percent in 2007 due to the impacts of inflation in Russia and the fall in the US dollar?s exchange rate. Our sales are primarily in US dollars while our costs are primarily in Russian Rubles.”

Vladislav Tetyukhin, the Director General of VSMPO-AVISMA, added:
”Our currently implemented plans for the modernization and expansion of our production facilities will enable VSMPO-AVISMA to meet the future requirements of our strategic partners for the titanium products we produce and deliver to the leading industries in Russia and the entire world. We will also increase our production of higher value-added titanium products. Implementation of these plans will both enhance our reputation in the market as an industry leader and will generate additional profit upon their successful completion.”

The consolidated financial statements of PSC VSMPO-AVISMA Corporation for 2006, prepared in accordance with the accounting principles generally accepted in the United States of America (US GAAP) and audited by PricewaterhouseCoopers is available on the Company’s website at www.vsmpo.ru

PSC VSMPO-AVISMA Corporation, headquartered in Verkhyna Salda, Sverdlosk Region of Russia, is the world’s largest producer of titanium products, mostly used for aerospace applications. Production facilities comprising the Corporation are united by a single process flow and employ approximately 20,000 people. AVISMA’s sponge titanium is used at VSMPO in production of higher value-added products, such as sheet, section, forging, die forging, etc. Up to 80% of such titanium products are exported.

The statements contained in this release that are not historical facts are forward-looking statements involving risks and uncertainties. They include, for example, the effect of world events on civil aircraft industry, military expenses, global economic conditions, competitive nature of the markets of special metals, the ability of the Company to get the required volumes of raw materials, the impact of inflation on costs, the effect of changes in currency exchange rates and successful completion of the Company’s projects on capacity expansion, ability of the Company to carry out internal control over the financial statement as well as other risks and uncertainties, included in the Company statements and reports filed with regulatory agencies. Actual results may differ materially from those forecasted or expected. The information contained in this press-release shall be read in conjunction with the official statements of the Company.