OREANDA-NEWS. March 2, 2011. According to the preliminary data, Mariupol Heavy Machinery, a Ukrainian producer of freight railcars, reported a net loss of UAH 189mn in FY10, up 13% compared to FY09, UkraNews reported Mar 1. On a quarterly basis the company’s net loss surged 2.7x qoq to UAH 64mn in 4Q10.

Concorde Capital: in separate news Azovmash announced further progress over the first two months of 2011. The group increased revenues 1.8x yoy (UAH 1.1bn) that had been driven by rise in railcar production. MZVM and AZGM, another heavy machinery producer affiliated with Azovmash, increased output of freight and gondola railcars by 1.3x yoy and 3.0x yoy in Jan-Feb 2011.

We consider the news as NEGATIVE for MZVM. We believe the higher transfer pricing is responsible for the surge in losses since the parent Azovmash has recently reported the group had increased railcar production by 2.2 yoy in FY10.