Poltava Iron Ore Reports Weak 1H Results.

Poltava Iron Ore (PGOK: HOLD) reported a 14% yoy decrease in revenues in 1H06. Profitability seriously suffered: a 16% EBITDA margin in 1H06, down from 34% in 1H05, and a 3% net margin in 1H06, down from 22% in 1H05. On the bright side, 2Q06 sales of $117.2m were up 20% over 1Q06’s sluggish numbers, which management has said were depressed by the severe winter. Eugene Cherviachenko: The company still does not publish consolidated results for PGOK and its affiliated trader. The deteriorating margins demonstrate continuing transfer pricing. We are becoming less optimistic about the pace at which the company will introduce greater transparency.

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             2Q06      Chg, qoq   Chg, yoy    1H05      1H06    Chg, yoy

Sales       $117.2m      +20%       -14%    $249.9m    $214.5m    -14%

EBITDA       $22.2m      +85%       -61%     $84.0m     $34.2m    -59%

Net Income    $7.3m      +478%      -82%     $55.7m      $6.0m    -89%

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Source: Ferrexpo Poltava Mining