Translated material
Power Machines showed a loss
Management and potential buyers of the company do not consider it dramatic
Power Machines, a company in which there has recently been a real struggle for the right to acquire a stake in it, announced yesterday the results of its activities according to International Financial Reporting Standards (IFRS) for the first half of the year. They turned out to be not as rosy as investors would like to see. The uncovered loss of Power Machines amounted to $1.027 million versus $8.067 million in profit a year earlier. However, revenue increased by $327.018 million compared to $282.807 million a year earlier.The company's general director, Igor Klochko, commenting to Vremya Novostei on the decline in Power Machines' performance for the first half of the year, said that it is unfair to judge a company focused on long-term contracts based on interim indicators. And the loss in the first half of the year is not critical for it. It is associated with an increase in costs during the reporting period. “Prices for raw materials and components for our products are growing very quickly, some of this is exchange goods, and due to our specific nature, we simply cannot respond to the market as quickly and raise the price of our products,” complained Mr. Klochko. According to him, over the past six months the company's expenses on transport, energy, and metallurgical components increased. The strengthening of the ruble also had a negative impact, since the company receives more than half of its revenue from export contracts, and in dollar terms its performance is noticeably declining because of this.
However, as Mr. Klochko noted, “costs were growing according to objective indicators, but there are also subjective factors in the company’s activities.” In particular, an internal reorganization of business process management is taking place, which should subsequently yield positive results.
The general director of Power Machines said that the company is constantly negotiating to attract new orders. The main increase in the order portfolio is expected next year, and in 2007 the company expects to receive additional revenue from increasing this portfolio. At the moment, the company's order portfolio, according to Mr. Klochko, is about $400 million. However, Mr. Klochko refrained from making a general assessment of the situation and forecast for the current year.
One of the contenders for a stake in Power Machines is RAO UES of Russia (which has already determined the maximum price for a 22.43% stake in the machine-building company - $101.7 million - and even approved attracting a loan from Vneshtorgbank for these purposes) -- is also not inclined to dramatize its performance for the first half of the year and practically agrees in their assessment with the management of Power Machines themselves. “It is incorrect to talk about the inefficiency of Power Machines based only on interim semi-annual reports, given that we are talking about a company that enters into contracts for three to five years. Long contracts can thus “play” in reporting. It is more important for us that Power Machines is a supplier of equipment that is equipped in almost 70% of our stations. As consumers, we know in which direction to adjust the technical policy of Power Machines. Increasing the level of products will ultimately affect the competitiveness and efficiency of the concern,” the press service of the energy holding told Vremya Novostei.