Research Notes

Holding Company Akron is one of leading Russian mineral fertilizer producers with strong positions on the global markets. The Company's strong competitive edge is ensured by the expansion strategy for regions with strong potential demand. Akron is looking to qualitatively resolve the problems of logistics, raw material base and sales network which are key components of the agrochemical business. The Group implements large-scale investment projects intended to improve production and transportation efficiency and as a result, strengthen Akron's positions in the long term.

One of the Holding's enterprises is located in China and therefore, Akron has access to the Asian market which, according to estimates, will account for up to 70% of growth in the mineral fertilizer consumption market.

Akron Group plans to revise the balance of supplies in the mid term and reduce the share of exports from 80% to 50% in favor of the domestic market. Investments in the Russian agricultural sector are on the rise. Huge pent-up demand for fertilizer coupled with improved financial solvency makes the Russian market one of the most promising and dynamically expanding for mineral fertilizer producers.

Akron has been steadily working to develop an in-house raw material base in order to reduce dependence on external raw material suppliers as much as possible. For this purpose, North-West Phosphorus Company and Verkhnekamskoye Potassium Company were established. The holding has been gradually resolving the logistics infrastructure problem.

Akron earmarks strategic investments as part of the special-purpose investment program for 2005-2015. Investments will top $1.4 bln for this period and they are to be largely allocated to strengthen price competitive edge of the Group's enterprises.

The Group released upbeat FY06 financials. The year 2005 was extremely successful for Akron and the company posted steady growth in 2006. In addition, the company ranks among industry leaders in terms of net profit margin.

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Timur Khabitsov

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