OREANDA-NEWS. Note: Russian accounting standards (RAS) results differ materially from US GAAP results and are not  comparable to financial statements prepared in accordance with 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 August 2013.

Q2 revenue increased by 1.6% q-o-q due largely to an improved sales mix (finished product sales increased  by 4% q-o-q, including a 5% growth in high value added product sales) while total sales declined slightly (the  decline affected slab sales (-9% q-o-q) and pig iron sales (-60% q-o-q)). On a year-on-year basis, revenue  decreased (-9.4%), pressured by lower steel product prices.

Gross profit increased by 31% q-o-q as production costs reduced while revenue grew marginally. These  factors, alongside a q-o-q decrease in general and SG&A  expenses, had an impact on the Company’s  operating profit.

Q2 net profit stood at RUB 8,422 billion. The significant q-o-q growth was related to Novolipetsk receiving  dividend payments from its subsidiaries.

Revenue decreased q-o-q, pressured mainly by lower sales compared to the Q1 2013 high base effect  when previous quarter sales were recognized.
Operating losses were reduced through decreasing production costs as part of the cost optimization measures.

The Company’s lower operating loss and the positive impact of FX rate differences resulted in lower net losses in Q2 2013.

Q2 revenue increased by 7% q-o-q driven by higher sales (mainly to Novolipetsk) and higher iron ore prices.

Higher revenue and tight control over production and administrative costs had a positive impact of gross profit (+10% q-o-q) and operating profit (+12% q-o-q).

Alongside these factors, the 36% q-o-q increase in net profit was supported by positive FX rate differences being reflected in other income.

Q2 revenue dropped by 10% q-o-q. This was largely the result of lower sales (the decline affected coke deliveries to Novolipetsk) and lower coke prices.

Gross profit and operating profit increased by 32% and 35%, respectively, driven, among other factors, by optimizing the composition of the input  charge  as part of the Management gains program being implemented at Novolipetsk and at Altai-Koks.

The Company’s financial performance was weaker year-on-year, pressured by the narrowed coke/coal concentrate price spread.

The 10% q-o-q increase in revenue was driven by higher long product sales (+9% q-o-q) due to the seasonal recovery in demand from the construction sector in the domestic market.

Gross profit and operating profit increased by RUB 305 million (+39% q-o-q) and RUB 91 million (x3.5 q-o-q), respectively.

The Company’s net loss is still attributable to its high debt level. The year-on-year increase in NSMMZ loss resulted from the Company’s overall weaker financial performance due to lower long products prices.