URALCHEM Holding P.L.C. reports strong 1Q 2010 IFRS financial results

     - Revenue increased to US$ 325 million from US$ 235 million in 1Q 2009
     - Operating profit increased to US$ 39 million from US$ 7 million in 1Q 2009
     - Adjusted EBITDA increased to US$ 66 million from US$ 48 million in 1Q 2009
     - Net income amounted to US$ 19 million compared to a net loss of US$ 118 million in the first quarter of 2009

Moscow, Russia – 18 June, 2010 – URALCHEM Holding P.L.C. (“URALCHEM” or “the Company”), a company incorporated in Cyprus and the holding company for URALCHEM Group (“the Group”), one of the largest producers of nitrogen fertilizers in Russia, today announces its unaudited IFRS financial results for the first quarter ended 31 March, 2010.

URALCHEM key financial results for the first quarter of 2010 and 2009 (millions of US$)

Dmitry Osipov, Chief Executive Officer of UralChem OJSC, commented on the Company’s first quarter 2010 results: “UralChem showed significantly improved results in the first quarter of 2010 due to a global recovery in fertilizer demand, which began at the end of 2009 and continued into the beginning of 2010. This has enabled us to push forward with our strategy of increasing the share of market-tailored products in our total production. With around 1.2 million tonnes of fertilizers and ammonia sold in the first quarter of 2010, 29% of which was value-added products, we are on track to achieving the goals we have set for 2010”.

Elena Zevako, Chief Financial Officer of UralChem OJSC, added: “Thanks to strong improvements on the global fertilizer markets in the first quarter of 2010, we saw our revenue grow by 38% year-on-year to US$ 325 million. Our Adjusted EBITDA likewise increased by 38% to US$ 66 million during the first quarter”.

Financial Results

UralChem’s revenue increased by 38.3% year on year to US$ 325 million in the first quarter of 2010 compared to US$ 235 million in the corresponding period of 2009. Operating profit increased to US$ 39 million with an operating profit margin of 12%, compared to operating profit of US$ 7 million with an operating profit margin of 3% in the first quarter of 2009.

In the first quarter of 2010 UralChem reported net profit of US$ 19 million compared to a net loss of US$ 118 million in the first quarter of 2009.  The Company’s Adjusted EBITDA increased to US$ 66 million in the first quarter of 2010, compared to US$ 48 million in the first quarter of 2009, a 38% increase from the same period of the previous year. Expressed as a percentage of total revenue, the Company’s Adjusted EBITDA margin for first quarter 2010 came in at 20%, which was slightly less than the first quarter of 2009, primary due to rising input costs and foreign exchange effect.

Markets

UralChem’s exports amounted to US$ 214 million in the first quarter of 2010 compared to US$ 167 million in the first quarter of 2009. In total volume terms, 64% of sales in the first quarter of 2010 were outside of Russia.

Fertilizer prices continued to rise after having fallen precipitously as a result of the global financial crisis of 2008-2009. Prices for ammonium nitrate, one of UralChem’s key products, rose to an average of US$ 239/tonne (FOB Black Sea) during the first quarter, a 31% increase from fourth quarter of 2009. Realized prices for phosphate fertilizers, DAP and MAP, increased most dramatically, up 43% to US$ 455/tonne (FOB Baltic Sea) from fourth quarter 2009 levels.

Sales and Production

UralChem’s sales volume of products increased by 7% year-on-year to 1.2 million tonnes in the first quarter of 2010. Phosphate fertilizer sales volumes increased by 112% during the period, owing to restored demand following after many farmers had chosen to skip a season of phosphate fertilizer application in 2009. Tonnes of ammonia sold rose by 61% in first quarter 2010 as the company, as market conditions made it profitable for the company to sell straight ammonia as opposed to processing it further into urea.  Urea was the only UralChem fertilizer product whose sales levels temporarily decreased in first quarter 2010.

URALCHEM sales volumes in the first quarters of 2009 and 2010 (thousand metric tonnes)

Dmitry Osipov, Chief Executive Officer of UralChem commented on sales achievements for the first quarter of 2010: “Improving market conditions allowed us to increase our sales volumes by 7% in the first quarter of this year. The most significant increase was in our phosphates segment, where sales volumes increased by 112% year-on-year. In the case of selling ammonia over urea in the first quarter of 2010, our flexible production model once again allowed us to shift production plans to capture maximal margin from market pricing conditions”.

Financial position

Cash flow from operating activities (before tax and interest paid) in the first quarter of 2010 amounted to US$ 65 million compared to US$ 18 million in the first quarter of 2009, primarily due to the increase in revenues from positive pricing dynamics compared to the first quarter of 2009.

As of 31 March, 2010, the Company’s net debt totaled US$ 1 358 million. The weighted average interest rate for the Company’s debt portfolio in the first quarter of 2010 was 9.6%, compared to 11.2% weighted average for the corresponding period of the previous year.

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For further information, please refer to www.uralchem.com or use the following contacts:

Investor Relations
Thomas Kiehn
Tel: +7 (495) 721-8989 (ext. 1108)
thomas.kiehn@uralchem.com

Public Relations Department
UralChem OJSC
Tel: +7 (495) 721-8989
pr@uralchem.com                                                                                        

URALCHEM Holding P.L.C. is the holding company for URAJCHEM Group which primarily consists of three mineral fertilizer production facilities in Russia. The Group is one of the largest producers of nitrogen and phosphate fertilizers in Russia and the CIS with production capacities of over 2.5 million tonnes of ammonium nitrate, 2.2 million tonnes of ammonia, 0.8 million tonnes of MAP and DAP, 0.8 million tonnes of compound fertilizers and 0.5 million tonnes of urea. UralChem Group’s three production facilities are located in the European part of Russia and include Kirovo-Chepetsk Chemical Works ("KCCW"), based in Kirovo-Chepetsk in the Kirov region; Azot ("Azot"), located in Berezniki in the Perm region; and Voskresensk Mineral Fertilizers ("VMF"), situated in Voskresensk in the Moscow region.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward-looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might", the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, as well as many other risks specifically related to the Company and its operations.

APPENDIX TO PRESS-RELEASE ON FIRST QUARTER 2010 UNAUDITED FINANCIAL RESULTS

“EBITDA” represents profit or loss from continuing operations for the period before income tax expense, interest expense, interest income and depreciation and amortisation. “Adjusted EBITDA” represents EBITDA for the period before impairment of goodwill, share of profit/loss of associates, foreign exchange gain/loss from financing activities and net gain/loss from derivative financial instruments. Adjusted EBITDA equals operating profit before depreciation and amortisation and net gain/loss from derivative financial instruments. Depreciation and amortisation are components of both cost of sales and selling, general and administrative expenses under IFRS. EBITDA and Adjusted EBITDA are not measures of financial performance that are required by, or presented in accordance with, IFRS. Accordingly, they should not be considered as alternatives to profit for the period as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of EBITDA and Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because they are indicators of the strength and performance of our ongoing business operations and indicators of our ability to fund discretionary spending such as capital expenditures, acquisition of subsidiaries and other investments and our ability to incur and service debt. While depreciation and amortisation are considered operating costs under IFRS, these expenses primarily represent non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods.

Adjusted EBITDA reconciliation for the first quarter of 2010 and the first quarter of 2009 (thousands of US$)

Condensed consolidated interim financial statements for the three months ended 31 March 2010 (unaudited)