MAGNITOGORSK IRON & STEEL WORKS

Q1 2011 IFRS Financial Statements Presentation

MMK Group Q1 2011 Highlights

2

Revenue USD 2,216 mln – 15% growth to Q4 2010

Operating profit USD 155 mln – 45% growth to Q4 2010

EBITDA USD 403 mln – on level with Q4 2010

EBITDA margin – 18,2%

Q1 2011 Financials

Q1 2011 Key Operational Figures

Finished steel output – 2,707 th. tonnes – 8% growth to Q4 2010

High value added (HVA) products output – 1,080 th. tonnes

Share of HVA products in sales – 39%

Share of domestic sales in revenue – 76%

Key Contribution Factors

3

• Largest domestic player with strong direct exposure to growing sectors of

Russian economy

• Import substitution strategy with focus on niche HVA products

• Target investments into high-quality assets and high-margin projects

• Growing integration into raw materials and increasing use of captive iron ore

and coal sources

• Strict cost control – retaining competitiveness through low cost position and

reduction of consumption ratios

• Strong balance to secure further growth

0

500

1 000

1 500

2 000

2 500

3 000

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

High value-added (HVA) products Flat hot-rolled products

Long products Slabs and billets

Growth Output Driven by HVA Products

4

MMK key operational indicators • Finished products output in Q1 2011 rose

by 8% q-on-q and amounted to 2.7 mln

tonnes

• Main growth drivers are mill 5000 thick

plates, h/r steel and long products

• Q1 2011 HVA products share output

amounted to 1,080 th. tonnes, which is on

level with Q4 2010

Finished products sales

th. tonnes

Q1 11 Q4 10 +/-

Cast iron 2 471 2 363 4,6%

Crude steel incl. 3 092 2 765 11,8%

EAF steel 641 57 x11,2

BOF steel 2 451 2 708 -9,5%

Finished products output incl. 2 707 2 508 7,9%

Slabs and billets 45 11 -

Long products 335 315 6,2%

Flat hot-rolled products 1 396 1 246 12,0%

High value-added (HVA) products 931 936 -0,5%

Thick plate (Plate Mill 5000) 307 294 4%

Flat cold-rolled products 272 284 -4,2%

Downstream products* 352 358 -1,7%

MMK-Metiz finished products 123 120 2,0%

ММК-Atakas finished products 28 45 -37,8%

Belon coking coal concentrate 766 842 -9,1%

* - galvanized steel products, colour-coated steel products, formed section, band, tin plate,

etc.

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Domestic market, th. tons Export, th. tons

807

809

300

400

500

600

700

800

900

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

domestic market export

Strong Exposure to Price Premium Domestic Market

Domestic market price premium, USD Sales by market, th. tonnes

5

HVA products output growth, th. tonnes

1 898

1 110

• While retaining presence in key export markets, MMK

continues to supply end-customers in Russian and theCIS

• Share of domestic sales was 70%, providing 76% of total

revenue

• HVA products satisfy domestic market demand

• Domestic market continues to offer price premium

• Q1 2011 average steel products price per tonne on

domestic market was USD 828, on export markets: USD

601

Q4 2010 - USD 177

Q1 2011 – USD 227

936 931

0

500

1 000

Q4 2010 Q1 2011

Domestic Sales Structure

6

Domestic sales of finished products

Domestic sales by region

Long products

17%

Flat hot-rolled

products 40%

Mill 5000 products

16%

Flat cold-rolled

products 10%

Downstream products

17%

Q1 2011

Domestic sales by industry

HVA

43%

Ural 40%

Volga Region 31%

Central Region 9%

Siberia 6%

Far East 0,4%

South 3%

North-West 2%

CIS 9%

Q1 2011 Hardware and semi-integrated

factories 9,8%

Pipe production

32,9%

Machine building 12,4%

Automobile sector 7,1%

Bridge building 0,3%

Construction sector 10,5%

Food industry 0,5%

Fuel and energy companies

0,5%

Spot sales 16,6%

CIS sales 9,5%

Q1 2011

• Q1 2011 domestic shipments amounted to 1,898 th. tonnes

• HVA products account for 43% of domestic shipments

• Shipments to the highest metal-consuming regions –

the Urals and Volga Region - accounted for 71% of sales

• MMK’s largest clients remain pipe-makers, car

manufactures and heavy machinery companies

Presence on Key Export Markets

Export shipments by product type

Export shipments by region

7

• Q1 2011 ММК export shipments increased by 40% q-o-

q and amounted to 809 th. tonnes

• HR steel continues to prevail in the exports

structure, accounting for 80% of MMK exports

• Middle East and Europe remain the largest export

markets of MMK

• Exports account for 30% of overall shipments in Q1

2011

• Exports accounted for 24% in Q1 2011 revenues

Share of export shipments in revenue

54%59% 61%

66%72%

64%

75% 76%

46%41% 39%

34%28%

36%

25% 24%

0%

50%

100%

2004 2005 2006 2007 2008 2009 2010 1Q2011

Domestic Exports

Asia and Far East 4%

Middle East 64%

Europe 26%

North America

1,2%

Africa 4%

Middle and Latin America

1,1%

Q1 2011

Slabs and billets 5%

Long products

2,1%

Flat hot-rolled

products 80%

Flat cold-rolled

products 11%

Downstream products

2%

Q1 2011

Key P&L Statement Figures

8

MMK Group Q1 2011 revenue equalled USD 2,216 mln – 14% higher

q-on-q

Q1 2011 operating profit grew at faster pace and totalled USD 155

mln – up 45% q-on-q

MMK Group Q1 2011 EBITDA was on level with Q4 2010 and

equalled USD 403 mln

Q1 2011 EBITDA margin – 18.2%

Profit for the period in Q1 2011 has more than tripled q-on-q to USD

134 mln

MMK Group Q1 2011 Financial Highlights

MMK Group revenue, USD mln

9

MMK Group EBITDA, USD mln ММК Group financial highlights, USD mln

• Revenue growth of 14% q-on-q in Q1 2011 was driven

by an 8% increase in output at the beginning of 2011

and 14% growth in average prices

• MMK Q1 2011 operating profit increased by 45% q-on-q

• MMK Group Q1 2011 EBITDA remained on the same

level as Q4 2010 and was 8% higher compared to Q1

2010

• MMK Q1 2011 profit for the period more than tripled q-

on-q

1 652

2 068 2 055 1 944

2 216

0

500

1 000

1 500

2 000

2 500

Q1 Q2 Q3 Q4

2009 2010

374

437

388

407 403

300

350

400

450

Q1 Q2 Q3 Q4

EBITDA 2010 EBITDA 2011

Q1 11 Q4 10 +/- %

Revenue 2 216 1 944 272 14%

Operating profit 155 107 48 45%

EBITDA 403 407 -4 -1%

EBITDA margin 18% 21%

Profit for the period 134 42 92 219%

362 362

427451 451 450

65

24

8

-8

300

350

400

450

500

Slab cash-costQ4 2010

Price growtheffect

Raw materialsstructure

Tariffs growtheffect

Others Slab cash-costQ1 2011

1 944

2 103

2 216

214

-56

151

-38

1 800

1 900

2 000

2 100

2 200

2 300

Q4 2011

Revenue

Price growth

effect

Products

structure

Volumes

growth effect

Other

companies

Q1 2011

Revenue

107155

224

220

7627

0

100

200

300

400

Q4 10 Q1 11

Operating profit Depreciation Other factors

Q4 2010 revenue analysis, USD mln

MMK Key Performance Indicators Analysis

10

MMK Group EBITDA structure, USD mln

Cash-cost of slab evolution, USD

• Q1 2011 revenue increased by USD 272 mln q-on-q

due to higher average prices and output volumes

during the beginning of the year on growing export

demand as well as stable domestic demand, despite

the seasonal factors

• High demand from domestic and export markets

pushed the average price up from USD 664 per tonne

in Q4 2010 to USD 760 in Q1 2011

• Q1 2011 cash-cost of slab increased due to growing

raw materials prices and higher tariffs of natural

monopolies

USD 407 m USD 403 m

Strong Balance to Secure Further Growth

11

• MMK total assets stood at USD 18,082 mln as of March 31, 2011 – 8.0%

growth to December 31, 2010

• Property, Plant & Equipment increased by 8.4% during Q1 2011 and

amounted to USD 13,249 mln at the end of the period

• The balance sheet remains characteristically stable: equity accounted for

61% of total assets at the end of Q1 2011

• MMK has one of the lowest levels of debt among Russian peers. By the end

of Q1 2011 total debt equalled to USD 3,951 mln

• Highly liquid assets stood at USD 1,650 mln

515 460

1182 1190

0

200

400

600

800

1000

1200

1400

1600

1800

31.12.2010 31.03.2011

Cash and cash equivalents Securities

32%

42%

26%

31.03.2011

RUR USD Euro

62%

38%

31.03.2011

Long-term debt

Short-term debt and current portion of long-term debt

MMK Financial Strength

Debt structure breakdown by maturity profile Debt maturity profile, USD mln

MMK Group liquid assets, USD mln

1 697 1 650

12

3,951 USD mln*

* Lease incl.

Debt structure by currency

3,951 USD mln*

1236

594

763

312

778

0

200

400

600

800

1000

1200

1-st 2-nd 3-rd 4-th 5-th and beyond

Сильные позиции на внутреннем рынке MMK Cash Flow, USD mln

13

• The peak period of investments passed in 2010, and capex in Q1 2011 amounted to USD 381 mln,

30% lower than USD 543 mln in Q4 2010

• Investment activities are financed with long-term borrowings

• MMK demonstrates efficient working capital management

515

460

134 5

220

-83-30

-38

312

-379

-243

57

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1 000

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Outlook

14

• In Q2 2011 MMK operated at 80-85% capacity utilization rate

• We expect positive momentum to recover in H2 2011 with respect to both

demand and steel prices

• Overall Russian steel consumption is expected to grow by 10% in 2011,

mostly driven by pipe-makers and machinery builders and to some extent

by the construction sector

• Steel products output for MMK Group is expected to grow by 10-15% in

2011

Future Growth Factors

15

• Key beneficiary of steel market recovery

• Growing volumes and share of HVA products to secure sustainably high

efficiency

• Focus on specialty steel products to replace imports in Russia and to enjoy

domestic market price premium

• Access to lucrative Turkish flat steel market with high-quality steel products

• Direct exposure to growing industry sectors in the domestic market – pipe-

building, automotive and heavy machinery industries

• Strong balance sheet to secure further growth

• Plans for further strengthening in commodities

APPENDICES

ММК Group Revenue Breakdown

Revenue by type of products, USD mln Revenue by type of products

17

MMK Group Revenue MMK Group Revenue , USD mln

Q1 2011 Q4 2010 +/- %

Slabs 6 4 2 50%

Flat products 1 409 1 219 190 16%

Long products 166 159 7 4%

Downstream products 459 398 61 15%

Coal 39 54 -15 -28%

Other products and services 137 110 27 25%

Total revenue 2 216 1 944 272 14%

0%

64%7%

21%

2%6%Q1 2011

Slabs

Flat products

Long products

Downstream products

Coal

Other products andservices

91%

2%

2%5%

Q1 2010

Revenue OJSC MMK

Revenue of Belon

Revenue of ММК-Atakas

Revenue of other Group companies

Q1 2011 Q4 2010 +/- %

Revenue OJSC MMK 2 026 1 768 258 14,6%

Revenue of Belon 38 45 -7 -16,4%

Revenue of ММК-Atakas 35 34 1 2,8%

Revenue of other Group

companies 117 96 20 21,3%

Total revenue 2 216 1 944 272 14,0%

MMK material costs

Other Group Companies

Labour costs

Amortisation Others

Change in uninvoiced

products balance -500

0

500

1 000

1 500

2 000

2 500

1

ММК Group Operating Costs and Cost of Sales Structure

ММК Group operational costs ММК Group operational costs , USD mln

18

ММК material costs structure Cost of sales structure

Q1 2011

Iron ore (sinter) 14%

Iron ore (pellets)

15%

coals 24%

Scrap 14%

Other main materials

14%

Auxiliary materials

8%

Fuel from outside sources

8%

Power from outside sources

3%

Q1 2011

Q1 11 Q4 10 +/- %

Cost of sales 1 775 1 592 183 11%

Selling and distribution expenses 129 116 13 11%

General and administrative expenses 144 135 9 7%

Other operating (expenses)/income, net 13 -6 19

Total operating costs 2 061 1 837 224 12%86%

6%

7% 1%Q1 2011

Cost of sales

Selling and distribution expenses

General and administrative expenses

Other operating (expenses)/income, net

Events and Projects Update

19

ММК

• Intercos-IV, part of the MMK Group, began working on the 1st phase of the 2nd stage of the MMK-Intercos service center

and stamped components plant in St. Petersburg (11.04.2011)

• MMK Group announced operational trading update for Q1 2011 (20.04.2011)

• Chelpipe (ChTPZ) and MMK are creating their joint rolling stock to ensure timely deliveries of steel plate from MMK’s Mill

5000 to ChTPZ’s Vysota 239 production unit (26.04.2011)

• Fitch Ratings upgraded MMK credit ratings. Long-term IDR rating was upgraded to 'BB+' from 'BB' with stable outlook;

national long-term rating was upgraded to 'AA (rus)' from 'AA- (rus)' with stable outlook (19.05.2011)

• The Annual General Shareholder Meeting of MMK was held in Magnitogorsk (20.05.2011)

• MMK’ hot-rolled galvanized steel accepted by Renault

• MMK reported that the company has won an auction held on 21 of June 2011 where the bidders contended for the right to

explore and extract iron ore deposits of Kulmyakovsky field in Chelyabinsk region. As a result, MMK obtained the right to

work at the site for 25 years (21.06.2011)

Mill 2000

• MMK сarried out the tests on the first stage of its Mill 2000 (complex for the production of cold rolled steel including

continuous pickling line connected with tandem mill) (02.06.2011)

MMK-Atakas

• MMK-Atakas produced first 3,000 tons of hot-rolled plate at the plant in Iskenderun. MMK-Atakas launched color coating

line in Istanbul (19.05.2011)

ENRC

Disclaimer

20

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