Annual report 2007 - Magnitogorsk Iron & Steel Works ...

8
Marina Zhemchueva, Chief Accountant of OJSC MMK
and MMK Managing Company,Member of the MMK
Management Board:
“Today MMK meets the highest standards of transparency: we
have converted to preparation of quarterly financial statements
under international standards, and our auditor is Deloitte &
Touche, a world renowned company.”
Financial Operational Performance
According to the US GAAP consolidate statements, in 2007 the sales proceeds of the MMK Group amounted to
USD 8.197 billion. Compared to 2006 the sales proceeds grew by 28%, or USD 1.773 bn. The proceeds increase was
attributable to the increase of prices for steel products by 19.5% and an 8% output growth in physical terms.
The production and sales costs increased at a faster pace. The production costs, compared to 2006, grew
by 31%, or USD 1.459 bn due to a 22% growth in 2007 of the average production cost of 1 ton of steel and a 8%
increase of the total production of steel products.
The sales margin went down from 27% in 2006 to 25% in 2007. MMK’s Group operating income grew by 18%, or
USD 323 million.
Operational performance
200 200 200 2007
Net revenue 4, 829 5, 380 6, 424 8, 197
Total cost of products sold (3, 291) (4,057) (4, 659) (6, 118)
Operating income 1, 538 1, 323 1, 765 2, 079
Sales margin 32% 25% 27% 25%
Revenues
In 2007 the revenues from steel sales accounted for 90.2% of the total sales revenues. The annual revenues
reached USD 7.601 bn exceeding the 2006 figures by USD 1.599 bn.