The Uralvagonzavod Corporation ended 2015 with the largest loss in its history. The reason is a sharp decline in sales of gondola cars. But military equipment sells very well

The building of the Uralvagonzavod Research and Production Corporation (Photo: Donat Sorokin/TASS)

The loss of the Uralvagonzavod Corporation (UVZ) for 2015 amounted to 16.1 billion rubles, as follows from IFRS reporting. This is twice as much as a year earlier, when the company first reported under IFRS.

In the RAS reporting for 2015, published on April 4, the loss amounted to 10.1 billion rubles, and this became a record since 2003, when the corporation began publishing financial results.

Consolidated revenue in 2015 decreased by 16.4%, to 106.6 billion rubles, including revenue from sales in the domestic market decreased by 27%, to 73.1 billion rubles.

The reason for the loss is a sharp reduction in income from sales of gondola cars and tanks. In 2015, sales decreased by 2.5 times, to 16 billion rubles. In addition, from 5 billion to 13 billion rubles. commercial expenses increased from 2.5 billion to 4.5 billion rubles. - interest costs.

The production of gondola cars at UVZ decreased from 15.3 thousand units in 2014 to 1.9 thousand in 2015, according to statistics from the INFOLine agency, its general director Mikhail Burmistrov. The main buyer of railway equipment is UVZ-Logistic, a subsidiary of the plant. For example, in 2012–2013, it acquired almost 95% of the fleet produced. According to Burmistrov, the main problem is that UVZ and UVZ-Logistic made the wrong decision to rely on conventional rather than innovative gondola cars. And this market is now experiencing a serious decline. If in the last quarter of 2012 the average rental rate for rolling stock reached 1,100 rubles. excluding VAT, then in mid-2015 it dropped to 450–500 rubles, says the expert.

Now these rates are going up, but UVZ-Logistic’s significant debt load does not allow it to purchase the fleet in the same volumes. The company's debt burden, Burmistrov emphasizes, exceeds 80 billion rubles. Revenue of UVZ-Logistic in 2014 (latest available data) - 12.5 billion rubles.

UVZ produces Armata tanks, Terminator fire support combat vehicles, as well as gondola cars, tanks, platforms and other railway equipment. The combat vehicles produced at the plant are considered the most highly protected in the world, according to the plant’s website.

In 2015, the share of total revenue from sales of military products was 65%, civilian products - 17% (the rest is freight transportation). In 2014 the ratio was 56 to 38%. In its RAS reporting for last year, the company indicated that gross profit from sales of military equipment increased by 4 billion rubles compared to 2014, to 18 billion rubles.

UVZ is subject to US and EU sanctions. The company has limited opportunities for borrowing abroad and attracting investment. In its IFRS reporting, the corporation reports that the restrictions do not have a significant impact on operating activities, since the corporation does not have significant assets outside of Russia. However, there are difficulties in interacting with Russian banks that are subject to sanctions, UVZ admits.

Armata tank manufacturer suffered a record loss