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It is planned to invest over USD 700.0 million in Amkodor development

Companies and Markets
17:52 | 15.06.2017 | Business-News

It is planned to invest over USD 700.0 million in Amkodor's enterprises in two coming years. The Chairman of the Board of Directors of Amkodor JSC Aleksandr Shakutin stated it. The main sources of finance of the projects will be the Chinese credits, borrowings of the Belarusian banks, and own funds of the holding company. Amkodor plans to increase the localization level as much as possible and expand a range of products at the expense of the investment program.

 

According to Mr. Shakutin, all enterprises of Amkodor and related companies today produce a wide range of machinery and equipment. There are 26,700 products including 180 models of machines and modifications. The localization level ranges from 70% to 100% depending on the group of commodities. The holding company plans to meet the domestic market demands as much as possible, including component parts, and to increase the competitiveness in the foreign markets.

 

Over 50% (USD 430.0 million) of the total investment planned to be invested in the holding company in two coming years will be used to develop the hydraulic system production (Saleo Holding) and to construct a new plant in Kolodishchi (Amkodor-Mash). The Chinese credits will amount to USD 370 million. The own funds of the holding company will be USD 60.0 million.

 

It is planned to begin to construct a front loader and special machinery plant near Minsk with a capacity of 6.0k units per annum in the middle of the summer, the Director General of Amkodor JSC Valery Ivankovich told. The total project cost is about USD 250 million. The holding company has already coordinated the credit facility. All required documents are being drawn up now. It is expected that all financial issues will be settled in June-July.

 

Amkodor plans to develop the production of agricultural machinery. About USD 150.0 million will be invested in two coming years in the development of Amkodor-Semash that is specialized in the production of machines and assemblies for the agricultural manufacturers. Amkodor-Semash consists of Amkodor-Mozha and the enterprise of Amkodor-Semash of the same name. Amkodor–DOMZ and Elezer will join later. All participants of Amkodor-Semash are integrated into the unified processing chain. At that, every company produces its range of parts, assemblies, and units of Amkodor machinery.

 

Amkodor-Semash produces over 80 units of products today. About USD 40-50 million was invested in the modernization of the enterprises of Amkodor-Semash at this date. According to Mr. Shakutin, several concepts of the holding company development are developed depending on the foreign market environment.

 

Three largest Belarusian banks will partially finance the development of Amkodor-Semash and other projects. In particular, Belinvestbank will allocate USD 50 million to create a forest machinery plant in Logoysk.

 

Another large project that Amkodor plans to implement in two coming years is a cultural and business complex construction. The total cost of this project is over USD 200.0 million. The sources of finance are the direct Chinese investment without the bank security.

 

Mr. Shakutin did not specify the pay-back period, having added that the large investment would affect the financial performance of Amkodor. In particular, Amkodor JSC in 2015 met a net loss amounting to BYN 21.7 million due to a large investment. Following the results of the last year, Amkodor JSC made a net profit amounting to BYN 2.7 million.

 

The revenues from sales of Amkodor JSC almost doubled over the last year. It grew from BYN 89.1 million to BYN 172.0 million. This year, the holding company continues to increase the supplies to the domestic and foreign markets.

 

According to the data of the marketing center of Amkodor, the domestic supplies over January-May of the current year grew by 30-50% depending on the machinery modification. In particular, the sales of compact machines rose by 30%, front loaders – by 50%. If about 80 loaders were supplied to the domestic market over five months last year, then over 130 machines were shipped over five months this year.

 

The agricultural companies are the main customers. Over 40% of the products were supplied to the agricultural enterprises over January-May. Universal loaders with a capacity from 2 to 5 tons are mainly sold in the domestic market.

 

The holding company reckons that the tendency of growth will continue in H2 and it will allow the holding company to increase the share of the domestic market in the total turnover of Amkodor. This share was about 25% last year.

 

There is a favorable demand situation in the foreign markets. According to the estimates of Jungheinrich (one of the global leaders in the market of lifting and uploading machinery – note of BUSINESS NEWS), the global market of lifting and uploading machinery grew by 7.0% last year. The Russian market rose by 37.0% over the same period. The demand continues to grow this year.

 

According to the estimates of the Association of European Business, the sales of road-building equipment and special equipment increased by 29.0% in Russia in Q1 2017. In particular, the sales of loader-diggers grew by 57.0%, skid steer loaders – by 12.0%, wheel loaders – by 35.0%.

 

Amkodor doubled the supplies of the products to the foreign market over January-May according to the data of the Director General of Amkodor JSC Valery Ivankovich. According to him, the supplies rose thanks to the demand, the development of own distribution network, the local presence in the post-Soviet area markets, and the tight control of machinery promotion to the traditional markets – to Russia, Kazakhstan, Uzbekistan, and Ukraine.

 

"There is our own production facility in Russia. It is Amkodor-Bryansk. We implemented a serious modernization program and have a status of the Russian manufacturer. We can promote our equipment in the Russian market. The holding company participates in the state tenders in Russia and often wins. We plan to increase the localization, enter the state programs, and increase our share in the Russian market in 2017-2018," Mr. Ivankovich told.

 

It is planned to implement a gas and motor engine machinery program under the auspices of Amkodor-Bryansk LLC. Gazprom subsidizes this program. This year, the output of Amkodor-Bryansk LLC will be about 30 loaders per month. It is planned to increase the output of equipment to 50 units per month in 2018.

 

There are about 10 own facilities of Amkodor in the former Soviet Union countries. In particular, there are trade houses in Kazakhstan, Azerbaijan, and Uzbekistan. The holding company established a joint venture with the Uzbek partners last year and supplied machinery for USD 1.0 million.

 

Bangladesh is a perspective export direction among the far-abroad countries. Last year, Amkodor executed a large contract worth of USD 50.0 million and supplied 702 machines and almost 700 equipment units. This year, Amkodor opened a trade and service center in Bangladesh. According to Mr. Ivankovich, the holding company is now working on the contracts for supply of products for USD 17.0 million and for USD 100.0 million to Bangladesh.

 

Amkodor plans to implement a large project for supply of products to Africa this year. As Mr. Ivankovich noted, they have been working on the project for the second year taking into account the region specificity and its machinery demands. The planned supplies amount to USD 100-200 million.

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