OREANDA-NEWS. Implementing its comprehensive business efficiency improvement program, KAMAZ Group managed to greatly improve its financial and economic performance in 2012.

Proceeds

In 2012, KAMAZ’ sales on the Russian market remained mainly on the level of 2011. And the company showed almost equal growth rates of domestic and export sales.

The RF truck market was recovering. Though the market capacity in Russia grew by 16.5% to 116.4 thousand vehicles, the total sales volume of heavy-duty trucks didn’t reach the pre-crisis level.

KAMAZ is still the leader on the RF market. With strong rivals on the European and Asian markets, against the background of Russia’s entry into the WTO, it is natural that KAMAZ’s share on the Russian truck market has slightly decreased. The company’s market share made 33% in 2012, which is less than in 2011 when KAMAZ’s share was only 28%.

In 2012, sales proceeds increased by RUB 10,218m or 9.6% from RUB 106,830m in 2011 to RUB 117,048m in 2012. This growth is mainly related to an increase in proceeds from sales of vehicles, trailer equipment and sales of design services.

72% of proceeds for 2012 are obtained due to sales of trucks, 12% – spare parts, 7% – sales of buses, trailers and motor mixers, 9% – other activities. Thus, the share structure of the proceeds didn’t change year over year.

A much greater growth of proceeds (+9%) against an increase in cost price (+6%) enabled KAMAZ Group to raise a gross profit margin to 16.5% in 2012 as opposed to 14% in 2011. This was achieved due to lower costs of supplied materials and components, energy efficiency projects and stricter control of overhead expenses.

Profitability
Operating profit

In 4Q 2011, KAMAZ started implementing a comprehensive business efficiency improvement program developed after the example of analogous programs of its strategic partner and shareholder – Daimler AG. The program is meant for 2 years. The first results improved the situation as far back as 2H 2011 when the enterprise broke even again for the first time after the recession, and in 2012 the company also saw a positive effect from the program.

As a result, implementing its program, KAMAZ Group managed to gain an effect of RUB 5,241m from reduced expenses in 2012 and obtain an operating profit in the amount of RUB 8,019m against RUB 3,689m in 2011; an operating profit margin made 6.9% (2011: 3.5%). Management expenses were also reduced: their share in the 2012 proceeds was 4.9% (2011: 5.8%).

In addition, it should not go unnoticed that KAMAZ’s associated companies and joint ventures showed good performance with a total revenue of RUB 43,397m in 2012 and a net profit of RUB 1,099m. The share of KAMAZ Group in the net profit of these associated companies and joint ventures, published in the consolidated statements on profit-and-loss in 2012, was RUB 526m (2011: RUB 57m). Almost all joint ventures reach an estimated capacity after 2 or 3 years of their development to receive profit and continue investing their own funds in production localization.

Net profit

KAMAZ Group’s net profit grew from RUB 1,778m to RUB 5,740m which is 4.9% in the proceeds (2011: 1.7%). Besides the above factors, the net profit grew in 2012 due to reduced financial expenses, an increase in interest yields and a profit from revaluation of the company’s exchange commitments.

Credits and loans

In comparison with performance at the beginning of 2012, KAMAZ Group’s debt load reduced by RUB 6,503m, financial debt made RUB 16,521m (as of December 31, 2011 – RUB 23,024m), and a ratio of its net debt to EBITDA decreased to 1.1. Not the least of the factors reducing the burden was KAMAZ Group’s program of centralization of liquidity management.

The financial debt was lowered due to credit repayment basically in the following banks: Sberbank – RUB 5,138m, Ak Bars Bank – RUB 1,436m, VTB Bank – RUB 1,200m. The debt was restructured: as of the end of the period, the debt includes mainly long-term credits and bonded loans attracted by the company to finance investment projects.

Investments

Investments in R&D and modernization of the basic assets made RUB 3,525m in 2012, or 3% in the proceeds (2011: RUB 3,712m, 3.5% in the proceeds).

В 2012 году в общем объеме капитальных вложений наибольший удельный вес составили инвестиции в приобретение основных средств – 74% (в 2011 году – 73,5%). Инвестиции в опытно-конструкторские разработки и приобретение нематериальных активов – 25,2 % (в 2011 году- 23,5%) и прочие инвестиции - 0,8% (в 2011 году – 3%).

In 2012, investments in basic assets made 74% (in 2011 – 73.5%) in the total investment. Investments in R&D and non-material assets were 25.2% (in 2011 – 23.5%) and other investments made 0.8% (in 2011 – 3%).

The key investment outlay was made on projects for development and production of a new line of KAMAZ vehicles and cabs, Euro 4 and 5 engines, and other projects under the development strategy of KAMAZ Group.