Sukhoi Civil Aircraft reports its audited consolidated 2008 financial results according to IFRS. Revenue totaled $6 million.

The main financial indicators of SCAC for 2008: Revenue for 2008 increased by 9.5 times and totaled $5.956 million. Operational loss totaled $44.783 million, compared with the profit of $2.7 million in 2007. Net loss for 2008 totaled $114.713 million, compared with the net income of $3.622 million a year earlier. Total assets for the year rose by 27.3% and reached $859.826 million. Net financial debt for the year rose by 66% to $784.787 million.

The reduction of the governmental grants in 2008 compared with 2007, as well as the weakening of the ruble against the U.S. dollar and euro in the period from August through December of the last year (by 25.3% and 13.4%, accordingly) had the main impact on the company’s results in the reported period.

In 2008 the company achieved a significant reduction of commercial expenditure, allowing to maintain operational costs at the level of 2007 (operational costs rose by just 1%). Yet the reduction of the governmental grants by 4 times from $66.6 million in 2007 to $16.7 million in 2008 has negatively impacted operational profit. As a result the company has recorded operational loss of $44.783 million for 2008.

The weakening of the ruble has led to additional costs for servicing and paying debt in foreign currency, as well as costs in the form of negative exchange rate differences from revaluation of that debt. Costs on interest payments increased by 16.5 times and reached $14.402 million, costs from revaluation totaled $80.369 million. As a result the net loss for 2008 totaled $114.713 million.

The main part of the assets is comprised of capitalized costs for research and development, as well as capital investment (60.4% and 19.1% from total value of assets, accordingly). Capital investment reached $164.612 million in 2008, which is 1.6 times more than in 2007; costs for research and development rose by 31.5% and totaled $519.129 million. The main part of costs for research and development was comprised of costs for design and tests (42.4% and 46.9%, accordingly).

Total debt reached $819.256 million at the end of 2008, which is 1.4 times more than in the year 2007. Short-term debt made up 46% of the total financial debt compared with 17% a year earlier. Short-term debt totaled $376.767 million, including a 10-year loan from EBRD for $141 million (the company received an official letter from EBRD in April of 2009, according to which the bank is not planning to demand an early repayment of the loan) and a 5-year loan from Bank Intesa for $25 million. The worsening of the availability of financial resources has impacted the average cost of the company’s financial resources, which rose from 8.06% in 2007 to 8.37% in 2008. However a positive long-term factor for the company’s financial stability is growth of the average term of attracted credit resources from 8.3 years to 9.3 years.

Maxim Grishanin, SCAC’s Senior Vice President for Economy and Finance, commented on the company’s financial results: “When looking at this financial report one should consider a fact that SCAC’s revenue for now reflects only the cost of the company’s completed research and development projects, since we are an executor of the Russian Federation’s federal program for development of the civil aviation regarding the creation of the family of regional aircraft. Excluding the exchange losses in the second half of 2008 (which were caused by the devaluation of the ruble — the factor which the company can’t influence), SCAC’s financial results correspond to the current investment stage of development, during which we are beginning the mass production of the aircraft and are completing the certification of our product. The indicators of the report will become more revealing when they include revenue from the main business activity — which is aircraft sales.

An important and positive factor for the company is the readiness of the country’s government to support such a significant for Russia civil aircraft project at a time of sharply changed macroeconomic conditions for its realization. This is supported by the Russian government’s decision to increase state funding for SSJ100 project by 3.6 billion rubles for financing of engineering efforts as part of the federal program, as well as 3.2 billion rubles to increase charter capital of the Sukhoi Holding Company for financing the SSJ100 project. Closing of the deal with our strategic partner Alenia Aeronautica in 2009 (the acquisition by Alenia of 25% +1 share in SCAC) will increase the capital of SCAC. Active state support of the Russian Federation and partnership with Alenia Aeronautica will make it possible to start aircraft supplies to its clients according to the schedule.”




 

(c) Centre for Asia Pacific Aviation. Date posted: 14-Jul-09