OREANDA-NEWS. On 05 August 2008 OJSC Novolipetsk Steel (NLMK) (LSE: NLMK) announces Q2 2008 Russian Accounting Standards (RAS) financial results for its major companies .

RAS accounting results differ materially from US GAAP accounting results and are not comparable to financial statements prepared in accordance with US GAAP. The RAS accounting results of NLMK Group’s major companies are not indicative of the financial condition or results of these entities under US GAAP. Reference should be made only to consolidated financial statements prepared in accordance with US GAAP for information with respect to NLMK Group’s financial condition and results of operations to be published in September 2008.

Highlights

• NLM Knon -consolidated financial results significantly increase In Q2 2008, NLMK’S revenue grew due to sales volume expansion and steel product price rises. The sharp increase in sales volumes in Q2 2008 is attributable to a recovery of sales volumes after a decrease caused by a change in the delivery basis to FOB for export contracts in Q1 2008.

The rapid rise in steel product prices in the reporting quarter, mainly on export markets, ensured the significant increase in sales revenue and gross profit compared to Q1 2008.

The dynamic growth of net profit in Q2 2008 is a result of dividend accruals from NLMK subsidiaries. Apart from this, net profit would have grown by 2.1 times as compared to Q1 2008.

• VIZ-Stal demonstrates stable financial performance A slight decrease in sales revenue in Q2 2008 was mainly due to an interruption in semi-finished steel products (cold-rolled full hard steel) used in transformer steel production supplied to the Lipetsk production site, coupled with as mall price increase of VIZ-Stal finished products. Semi-finished transformer product supplies from VIZ-Stal to the main production facilities in Lipetsk are performed in order to optimize transformer steel production at both the production sites and to increase consolidated financial results. VIZ-Stal results broadly maintained the level of the previous quarter. A slight decrease in Q2 2008 net profit compared to the previous quarter is due to a decrease in gains from deposits which is explained by dividend distribution. Operating profit growth was driven by an increase in steel prices coupled with gains from the forward contracts contributed to Q2 2008 net profit increase on a year-on-year basis.

• Stoilensky GOK financial results growth as compared to Q2 2007. The growth of Stoilensky GOK’s Q2 2008 financial results on a year-on-year basis is due to an increase in iron ore concentrate (all of which is supplied to the Lipetsk production site) and sinter ore prices, while production traditionally remained low. Iron supplies to NLMK are based on annual contracts with a fixed market price.

Increased gains from deposits became an additional factor that contributed to the second quarter net profit growth on a year-on-year basis. A slight decrease in iron ore concentrate and sinter ore supplies to NLMK due to the main production site’s reduced requirements resulted in a decrease in the financial performance of Stoilensky GOK in Q2 2008 on a quarter-on-quarter basis.

• NSMMZ (Maxi-Group main plant) financial results growth. The growth of NSMMZ financial results in Q2 2008 compared to the previous quarter was due to higher steel prices supported by a lower growth in purchased scrap prices. Growth in steel sales volumes and selling prices coupled with management initiatives aimed at improving operational performance of the production facility contributed to improved financial results during the period compared to the same period last year.

• Altai-koks significant growth in financial results in Q2 2008. The increase in Altai-koks’ key financial results compared to Q2 2007 was driven by coke price growth which began in H2 2007 volumes as well. The quarter-on-quarter growth in Altai-koks’ sales revenue was due to an increase in sales as a strong pricing environment for the company’s key products. A decrease in profit is mainly attributable to an increase in coal concentrate prices.

• TMTP financial results q-o-q growth. The quarter-on-quarter increase in TMTP’s Q2 2008 financial results was mainly due to an increase in bulk cargo transshipment volumes. Dividend contributions from subsidiaries in May 2008 was an additional factor driving Q2 2008 net profit. A decrease in TMTP’s Q2 2008 financial results on a year-on-year basis was mainly due to a reduction in bulk cargo transshipment volumes.

• Significant increase in NTK’s financial results. The substantial increase in NTK’s financial results in Q2 2008 compared to the analyzed periods is attributable to increased transportation volumes originating from Maxi-Group facilities starting from April 2008. This growth is supported by expanding transportation volumes in leased railway cars as well as increasing volumes of third party owned railway car operation services. The latter enabled NTK to reduce rail car usage fees paid to Russian Railways, thus cutting transportation costs.