Due to significant cost increase of metal, materials, components, and utilities in 2004, top-managers of KAMAZ Inc. had to revise the business plan for this year. Income and loss, production volumes, sales volumes of finished products, and other articles of the Company’s balance sheet have been corrected with consideration of the above.

As per the RF State Statistics Committee, since the start of 2004 average cost of ferrous metals in Russia grew by 8,3%, non-ferrous metals – by 6,8%, chemical industry products – by 6,6%. Cost of electricity grew by 22%, heat - by 30%. There is quite a pessimistic tendency on further cost increase of raw materials and utilities till the end of 2004. Calculations made lately with consideration of new forecast data indicate that till the end of this year cost of main operation activities of KAMAZ Inc. vs. 2004 business plan numbers will increase by 3,579 billion rubles, whereas income – only by 1,936 billion rubles.

Considering the above, KAMAZ Inc. has made necessary corrections in its 2004 business plan and the budget. The parent company’s divisions and subsidiaries are assigned to reduce losses by 1,140 billion rubles. There was issued a list of actions aimed at cost reduction.

Another way to improve the budget structure to save approved earlier financial results of 2004 business plan is to increase production and sales volume significantly. It is assumed that output target figures will be exceeded and there will be assembled by 1000 trucks and cars more. Their sales volumes will grow up to 27 413 and 41 000 units accordingly. This will earn the Company 1,6 billion rubles extra. Spare parts sale will earn another 136 million rubles, and products of diversification – 165 million rubles.

Growth of truck production volumes and increase of sales earnings will be achieved through introduction of new truck models, and increasing number of leased trucks up to 500 units annually, and export growth by another 500 units. However, inspite of significant growth of cost of raw materials, metal and utilities, cost of KAMAZ trucks will increase by 7% only.