Updated June 17, 2008

   Russia’s independent analytical organization in arms’ export area – Center for Analysis of Strategies and Technologies (CAST) – has published the annual rating of the largest companies by defense production volumes in 2007. The rating shows situation improvement in air industry and collapse in shipbuilding. Moreover, the range of large enterprises did not present their official data, and that, in CAST opinion, says about their dire financial condition.

   Volumes production growth of all defense companies presented in the rating continued in 2007. Leaders’ indices in particular demonstrated high production growth, such as OJSC Concern PVO Almaz-Antey (by 29%), JSC Sukhoi Company (by 144%), Irkut Corporation (by 82%) and Tactical Missiles Corporation JSC (by 49%). However, the tendency of the last 2-3 years consisting in the step-by-step stake increase of internal order and civilian production did not develop. "Almaz-Antey is the only company among the leaders which export stake continued to drop that testifies about the presence of large state defense order at air defense facilities, as well as Aerospace Equipment Corporation that considerably increased the civilian production stake", explained CAST director Ruslan Pukhov.

   CAST explains growth recovery of export stake and military production by "supplies growth of Su-30 fighters in the foreign customers’ interest" to India, Venezuela, Malaysia and Algeria. Ruslan Pukhov specified that the air sector unprecedented dominance in companies rating is also related to collapse in the shipbuilding segment. "Large export contracts of destroyers and submarines’ supplies to China have terminated, and contract execution of three new frigates’ construction for India on Kaliningrad Yantar shipbuilding plant has not been started yet".

   CAST experts mark that in 2007 took place deterioration of defense companies’ information openness. "It is foremost reflects in lack of shipbuilding enterprises data, as well as RAC MiG and Uralvagonzavod data that have earlier entered the rating", stated CAST expert Konstantin Makienko. This year JSC Baltiysky Zavod and JSC Severnaya Verf did not present their reporting as well. "As a rule, when a company refuses to present its financial information, it testifies either about serious enterprise problems or about ineffective work of public relations services", considers Konstantin Makienko. According to his opinion, one can except PO Sevmash data closure because of production of Russian Federation maritime nuclear deterrence forces and Amur Shipbuilding Plant constructing atomic submarine of 971I project. According to CAST estimations, Sevmash should have entered the top five as it carries out scale building of strategic submarine cruisers for Russia’s Navy, as well as reequips Admiral Gorshkov aircraft-carrying cruiser for India’s Navy.

   Enterprises gave different reasons of their unwillingness to present the reporting. At Baltiysky Zavod declared "they could not announce the information before 2007 fiscal year results approval within stockholders’ meeting". Moreover, according to the official enterprises data for 2007 (published on June, 10), it net loss totaled RUR 540 million. "We have been constantly presenting the consolidated balance sheet of all MiG Corporation. But by the moment CAST requested our financial information the consolidated balance sheet had not been ready yet", as said in RAC MiG and promised to present data in 2009.

   Experts trust CAST rating. "It is quite the objective rating as it is formed on the basis of companies’ reporting" stated editor of Russia/CIS Observer aerospace journal Maxim Pyadushkin. "There is a range of similar ratings abroad, for instance, in such journals as Defense News or Aviation Week & Space Technology. In Russia CAST rating is the only and unique tool permitting to estimate the activity dynamics of defense companies". AviaPort analytic service head Oleg Panteleev marks that "enterprises arrangement in the rating has been quite grounded". However, an expert notes that the last year financial indices growth in air industry took place on the background of rapid enterprises expenditures’ growth.

Rating of Russia’s military-industrial complex enterprises by total revenue (by Russian Accounting Standards)