Cumulative 4M08 industrial output growth improved to 8%, up from the 7.8% reported in 3M08. The higher output is still in line with our FY2008 forecast of 11.3%. The growth was partly a result of the improved dynamics of the steel and food processing sectors, which both benefited from a strong price environment. The steel sector, which contributed 25% to total industrial output, has begun to rebound (+2.3% in 4M08). Iron ore output increased by 6.5% in the reported period on the back of domestic price adjustments.
The machine building sector has not lost its momentum, as passenger car output remained robust, increasing by 35% y-o-y in 4M08. Chemicals producers, whose output is driven by strong global demand, boosted output by 3.3%. Taking into account the positive price growth so far, chemicals producers are expected to show increased earnings this year. The numbers in the coming months are expected to incorporate the upcoming price increases, mainly in the steel and food sectors, which will contribute to the overall earnings dynamics of these sectors.
Sergiy Kulpinsky, Ph.D Strategist(380 44) 490-1647
