Sergey Kogogin wished for KAMAZ the growth of sales
Thanks to Kazakhstan, a new breakeven bar of the auto giant and the future of the Russian racing team KAMAZ-master
The meeting of 24 June of the shareholders of KAMAZ PJSC held in IT-Park in Naberezhnye Chelny was more optimistic than last year. Despite the fact that the shareholders will not receive the dividends on the results of 2015, which turned out to be lossmaking, and the Board of Directors even recommended not to pay remunerations to themselves, the plans for 2016 are quite optimistic. Nevertheless, as the Director General Sergey Kogogin told Realnoe Vremya, the current plan to sell 32 vehicles is no guarantee of profit: they need to sell at least 36 thousand vehicles.
'There are reasons to believe that in 2016 the sales will grow'
Sergey Kogogin this time was full of reserved optimism. At the shareholders' meeting (92.2% voting shares for 625.5 million rubles, there was a quorum) he reported that, unfortunately, in 2015 the truck market, as well as the Russian economy, dropped. However, the export share of the company and the share of the Russian market increased. In 2014, KAMAZ occupied 41% of the market in its segment, and in 2015 the share even rose up to 51% (mostly due to the ruble devaluation and the cost increase of foreign trucks). As a result, the investments, which Kogogin promised not to cut last year, also increased. If to compare with 2 billion rubles of investments last year, the current 6 billion rubles are quite impressive.
'There are reasons to believe that in 2016 the sales will grow. In total in 2015 we sold 29.7 thousand vehicles, 23 thousand out of them – in the domestic market, and 6.5 thousand vehicles were exported,' said Kogogin.
The initial plan of KAMAZ on the sale of 11 thousand of trucks more was failed due to the economic situation
The head of the company didn't want to spoil the mood of the shareholders with comparisons with the results in 2014 and preliminary plans for 2015. But we have to do it. In 2014, the company sold 38.6 thousand vehicles. That, however, helped KAMAZ to finish the year in profit: the revenues from sales decreased in comparison with 2013 by 527 million rubles, and in 2014 the company closed the year with a loss of 424 million rubles according to the Russian accounting standards (in 2013 – a profit of 2 billion rubles). At the same time, they exported 6 thousand vehicles; 32.6 thousand – in the domestic market. As we can see, in 2015 they sold 3 thousand vehicles less, despite the fact that the export increased, but not very mush – only by 500 vehicles. The performance is even sadder regarding the planned targets: shortly before the crisis in the end of 2014, the company was hoping to sell 41 thousand vehicles in 2015. It turns out that the plan was failed by 11 thousand vehicles due to the difficult economic situation on the market. This year, KAMAZ has no hope to exceed the level of 40 thousand vehicles and keeps fingers crossed for a figure of 32 thousand vehicles (less than in 2014), out of which almost 7 thousand they intend to sell in foreign markets.
Kogogin noted that KAMAZ has strengthened its positions abroad and today operates in Africa, Latin America, Asia, the Middle East. The main markets for the automaker have become Kazakhstan, Turkmenistan, Vietnam, the UAE (in 2016, KAMAZ considers promising for itself Egypt, Peru, Iran and Indonesia).
The support the federal centre, the regional authorities and the corporation Rostec (the owner of 49% of KAMAZ shares), admitted the head of the company, helped them to endure the tough year. Including the state subsiding of CNG vehicles and the programme of fleet renewal. 'Otherwise, the drop for us would be more painful...' noted Kogogin. This year KAMAZ also intends to participate in many government programmes (read — hopes for federal support).
Without dividends, remunerations and with a negative profitability
The chief accountant of the company Tatyana Kinder noted that the currency in 2015 rose up to 12.8 billion rubles and amounted to 113.8 billion rubles. It total, they sold the products at 86.6 billion rubles, which is 17% less than in 2014. The result was a loss at 2.3 billion rubles (according to IFRS; according to the same IFRS in 2014 it was a profit at 211 million rubles). Kinder said nothing about profitability, but according to financial statements distributed before the meeting of the shareholders, in 2014 the profitability according to EBITDA was 5.1%, in 2015 — alas — minus 0.3. The net profit profitability — minus 2.4%.
'The main negative factors were the decline in revenue by 13.8 billion rubles, the growth of prices for metal and parts,' said Kinder.
As a result, the Board of Directors recommended not to distribute the profit on the results of 2015 to the shareholders due to its absence, as well as the dividends and the remuneration to the members of the Board of Directors of KAMAZ.
The President of Tatarstan thanked Kazakhstan for the growth of KAMAZ export
The President of Tatarstan Rustam Minnikhanov in his report thanked the federal government, including Rostec of Sergey Chemezov, for that KAMAZ though went down, but not as much as they feared. In the end, 'despite the difficulties, KAMAZ continues to work, keeping staff'. The regional government, promised the head of the RT, will support the automanufacturer in the future as before.
'Unfortunately, the market decline has affected the figures: the company's revenue fell by 27%. Due to limitations of funding and increased cost of loans, there is a decline in production in key sectors and a decline in investment activity in the construction industry,' said Minnikhanov. 'As a result of the devaluation of the ruble, the price competitiveness of KAMAZ has increased! Export is becoming increasingly important. In 2015, every fourth truck went abroad. In the end, the export of KAMAZ has increased by 8%. I would like to thank the leadership of Kazakhstan (the main consumer of KAMAZ in the foreign market in 2015 — editor's note) for their trust in our products.'
Minnikhanov suggested in light of the increased attention of Tatarstan economy to exports in general after the meeting with Igor Shuvalov on 10 June and the signing of the treaty between Tatarstan and the Russian Export Centre to include KAMAZ in all federal programmes that promote the growth of exports to far-abroad countries. Tatarstan President recommended to the company to develop the dealer network abroad more actively. Commenting on the recent meeting with the head of Gazprom on CNG vehicles, Minnikhanov noted that due to the opening of new gas stations in the Republic of Tatarstan there are 13 gas filling stations now, which should encourage to buy more the vehicles that run on gas fuel. Like the Tatarstan Republic does, which, according to Minnikhanov, for three years they have bought already 683 units of such vehicles, and in 2016, commits to purchase 288 units more. The aim — to transfer all public transport of RT to natural gas.
More than 90% of federal funds of the temporary employment programme will go to KAMAZ this year
Speaking about the latest innovations of KAMAZ, the Tatarstan President expressed hope that sales of the new 5490 long-haul tractor will increase the company's share in this segment from 4 to 19%. Minnikhanov advised Kogogin and his team to develop more actively a new heavy dump truck and a diesel engine, to work more closely with the partners on obtaining the status of the territory of advanced development. The President of Tatarstan announced that in the near future the Kama Industrial Part Master may obtain the necessary federal funding through the Fund of support of monocities, due to which will increase its area 2 times (from 643 thousand square meters to 1.34 million square meters). Besides, this year the support from the federal program of temporary employment of staff of the auto giant will be continued.
'Last year 89% of all funds allocated for this line to the RT went to KAMAZ, in 2016 KAMAZ will also receive significant funds,' promised Rustam Minnikhanov. 'Although the federal programme this year is much less, nevertheless we need more time to let the market stabilized. We are planning more than 90% this year.'
'For a breakeven we need to produce and sell at least 36 thousand vehicles'
At the press conference, the correspondent of Realnoe Vremya asked Sergey Kogogin about the general situation in KAMAZ according to the data on June 2016:
Better than last year? Or worse? Or absolutely nothing has changed? The patient is more alive than dead?
'If you talk about the position on the market, it is easier to work this year. On the results of the work during 5 months we have 37% growth on the market of Russia! This is a very good indicator, in my opinion. The struggle with the costs can not be infinite. For several years we have been making almost exploits, reducing costs. Now, as a rule, serious steps to reduce costs require funding. We have large investment budget, and it is not so easy to do. And the output of 32 thousand units this year does not guarantee a breakeven,' admitted the head of KAMAZ. 'Our economists have calculated that for a breakeven we need to produce and sell at least 36 thousand vehicles. This is our goal.'
'For competition we need four sports trucks more, each costs about 3 million euros'
At the same press conference, Kogogin together with Minnikhanov commented on the search for a new investor and the financing of the participation of the team KAMAZ-master in the international rally. According to the head of the auto giant, 'nothing supernatural is happening with the team', the main problem has arisen from the fact that the second founder of the team — Vnesheconombank — 'due to objective reasons could not meet their financial obligations'. Other sponsors, by contrast, have increased their participation.
'Each race requires significant financial resources,' said Kogoghin. 'Now we have to revise the budget. We have taken a number of steps for the replacement of the sponsor...'
'The main sponsor remains KAMAZ,' said Minnikhanov, commenting on rumors about a possible sponsorship of Sberbank. 'But it can not cope all by itself. There are positive orders from Putin and Medvedev… They constantly change technical requirements. KAMAZ has won — and now they impose new demands for 13-litre engine. It requires more investments, time.'
'The cost of each vehicle — a round amount. We have one truck. And for competition we need four sports trucks more, each costs about 3 million euros,' said Kogogin.