MMK Illicha Steel Posts 2006 Results

MMK Illicha Steel (MMKI: BUY) posted drops in its profit before tax (down 7.8% yoy to USD 0.345 bln) and sales (down 0.7% yoy to USD 2.82 bln). According to CEO Volodymyr Boiko, the reduction was due to rising prices for raw materials, fuel and energy resources and transportation. Andriy Gostik: Despite a slight worsening in financials for the whole year in 2006, MMK Illicha’s financial performance was remarkably strong in 2H06 which nearly offset a decline that occurred in 1H06 (sales were down 20% yoy and PBT was down 71% yoy in 2H06). The company’s reported top line in 2006 came out 4% higher than we anticipated. Given that MMK Illicha secured coke supplies from Yasynivky Coke and Altay Koks and received control over a coking coal mine in Ukraine in 2006, we think the 2007 outlook for the company is positive.