OREANDA-NEWS. Magnitogorsk Iron and Steel Works announces its consolidated IFRS financial statements for Q1 2013.

HIGHLIGHTS

MMK Group sales for Q1 2013 amounted to USD 2,283 million, up 10.4% q-o-q.

Cost of sales in Q1 2013 totalled USD 1,968 million, up 12.4% q-o-q.

EBITDA for Q1 2013 amounted to USD 256 million, down 13.5% from Q4 2012.

Net profit for Q1 2013 was USD 19 million, compared to a loss of USD 141 million in Q4 2012.

Growth in consolidated revenues of 10.4% in Q1 2013 q-o-q was largely due to growth in MMK Group's production volumes of finished steel products and improvements to the product structure.

Cost of sales of finished products in Q1 2013 increased by 12.4% q-o-q and amounted to USD 1,968 million.

The faster rise in cost of sales in Q1 2013 compared to Q4 2012 was driven by price growth for iron ore.

At present the market is seeing a declining price trend for iron ore, which should reduce the cost of sales in Q2 2013.

The cash cost of slab in Q1 2013 increased by 6.7% q-o-q and amounted to USD 399/tonne.

MMK Group's EBITDA for Q1 2013 totalled USD 256 million. The EBITDA margin was 11.2%.

MMK Metalurji's positive EBITDA in Q1 2013 helped reduce the negative impact on the profitability of MMK Group.

Profit for Q1 2013 amounted to USD 19 million compared to a loss of USD 141 million in the previous quarter. One-off factors impacting profit during the period included revenues from the sale of MMK Trans (gain of USD 125 million) and impairment of noncurrent assets by USD 50 million.

BALANCE SHEET AND CASH-FLOW HIGHLIGHTS

At the end of Q1 2013 MMK Group's total debt amounted to USD 3,630 million, which is USD 250 million less than at the end of 2012. This stemmed from the repayment of current debt and the ruble's decline against the US dollar, which impacted the value of ruble-denominated debt in the reporting currency.

The decline in the debt load helped reduce the company's Total debt/EBITDA ratio to 2.75x at the end of Q1 2013.

As of 31 March 2013 cash and cash equivalents stood at USD 347 million, together with liquid assets amounting to approximately USD 670 million. Together with undrawn credit lines totalling USD 1.2 billion as of 31 March 2013, these funds provide adequate liquidity to service MMK Group's current debt.

In Q1 2013 capital investments totalled USD 131 million, 14.4% down q-o-q.

Effective working capital management allowed MMK Group to free up USD 85 million in Q1 2013.

Despite the difficult situation on the markets for raw materials and steel, MMK Group continues to generate positive cash flow. In Q1 2013 free cash flow totalled USD 44 million.

MMK Group plans to use its free cash flow to further reduce debt.

MMK GROUP OPERATIONAL HIGHLIGHTS (THOUSAND TONNES)

Total crude steel output in Q1 2013 was 3,075 thousand tonnes (up 3.6% q-o-q).

Finished steel products output for Q1 2013 was 2,844 thousand tonnes (up 3% q-o-q).

MMK Group's total output of high-value-added (HVA) products in Q1 2013 was 1,355 thousand tonnes (+11.7% q-o-q).