Ilim Group 3Q Report

Market pulp production totaled 1,067,000 tons, which is 9% less than in the first nine months of 2008. The reason of such a reduction is closure of technologically backward and non-effective in terms of production costs dissolving pulp production in Koryazhma the beginning of 2009 year.

Board production increased by 8% and reached 495,000 tons. Paper production amounted to 152,000 tons, which is 21% less than in the corresponding period in the previous year.

Pulp and paper products manufacturing volumes were adjusted due to implementation of the anti-recession action plan aimed to ensure uninterrupted operation of mills, manufacture products demanded in the market, and secure overall financial stability of the Company.

Over the nine months of 2009, OJSC Ilim Group's locations within Ilim East Business Unit (the Bratsk and Ust-Ilimsk Branches) have manufactured 1,064,000 tons of pulp and paper products (-0,5%).

Market pulp output increased and reached 895,000 tons (+0,1%). Containerboard production went down by 4%, equaling 170,000 tons.

Pulp cooking output amounted to 1,156,000 tons (-0,5%).

Ilim Group managed to maintain Ilim East production practically at the same level as in 2008 year due to anti-crisis program realization aimed at reducing variable costs and at full running capacity.

Over the nine months of 2009, the Koryazhma Branch of Ilim Group, part of Business Unit Ilim West, has produced 653,000 tons of market pulp and paper products, which is 13% less than in the corresponding period of the previous year.

Among other products, market pulp production amounted to 175,000 tons. This is 36% less than in the first nine months of 2008. The reason of such a reduction is closure of technologically backward and non-effective in terms of production costs dissolving pulp production in the beginning of 2009 year.

Containerboard production went up by 13%, equaling 325,000 tons. Paper production amounted to 152,000 tons, which is 20% less than in the corresponding period in the previous year. By product types, this means 54,000 tons of sack paper, 79,000 tons of offset paper, and 19,000 tons of wallpaper. Board and paper manufacturing volumes were adjusted due to implementation of the anti-recession action plan aimed at making products demanded in the market.

The Koryazhma Branch of OJSC Ilim Group received a total of 3,022,000 cubic meters of wood, which is 22% less than in the first nine months of 2008.

In December 2008, OAO Ilim Gofra became part of BU Ilim West. Ilim Gofra's manufacturing output in the nine months of 2009 was fully in line with the Annual Plan, which is over 60 million m² of products.

Informational resources: Ilim Group, Russian Forestry Review