Manufacturer of tanks, “Armata” get a record loss

The net loss of the Corporation “Uralvagonzavod” (UVZ) in 2015 amounted to 16.1 billion rubles, follows from the statements in accordance with IFRS. It is twice more than the previous year, when the company first reported under IFRS.

Published in the April 4 reporting, the company for the year 2015, the loss amounted to 10.1 billion rubles, and this is a record since 2003, when the Corporation began to publish the financial results.

Consolidated revenue in 2015 decreased by 16.4% to 106,6 billion RUB, including revenue from sales on the domestic market decreased by 27%, to 73.1 billion rubles.

The cause of loss — the drastic reduction of revenues from sales of gondola cars and tank cars. For 2015 sales by 2.5 times, up to 16 billion rubles. in addition, from 5 billion to 13 billion rubles increased commercial costs and from 2.5 billion to 4.5 billion rubles — expenses on payment of percent.

Gondola production at UVZ has declined from 15.3 per thousand in 2014 to 1.9 million in 2015, quoted INFOLine analytical Agency General Director Mikhail Burmistrov. The main buyer of railway equipment is “UVZ-Logistik”, “daughter” plant. For example, in 2012-2013, it purchased nearly 95 percent of the Park. According to Burmistrova, the main problem is that UVZ and “UVZ-Logistik” made the wrong decision to rely on conventional, not innovative gondola cars. But this market is now experiencing a serious decline. If in the last quarter of 2012 the average lease rate of the rolling stock has reached 1100 RUB. without VAT, in the middle of 2015 decreased to RUB 450-500, says the expert.

Now these rates go up, but a significant debt load “UVZ-Logistik” does not allow the purchase of the Park in the previous volumes. The debt load of the company, emphasizes Burmistrov, exceeds 80 billion rubles. Revenue “UVZ-Logistik” in 2014 (latest available data) is 12.5 billion rubles.

UVZ produces tanks “Armata” combat machine fire support “Terminator”, as well as open wagons, tanks, platforms and other railway equipment. Produced at the plant fighting machines are the most highly protected in the world, it is stated on the website of the plant.

In 2015, the share in total revenue from sales of military products amounted to 65%, of civilian products — 17% (the rest is freight transport). In 2014, the ratio was 56 to 38%. In the financial statements, the company last year, the company indicated that gross profit from sales of military equipment increased in comparison with 2014 to 4 billion rubles to 18 billion rubles.

In relation UVZ sanctions the US and the EU. The company has limited capacity to borrow abroad and to attract investment. In IFRS, the Corporation reports that limitations do not have significant impact on operations, as the Corporation has no significant assets outside of Russia. However, there are difficulties in cooperation with Russian banks, targeted by the sanctions, recognizes UVZ.