Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Machine-Tool Giant Has Global Aspirations

Riding on a sharp increase in domestic demand on the part of the industrial sector, machine-tool giant Uralmash-Zavody hopes to increase sales 30 percent to $275 million this year.

The company, based in Yekaterinburg in the Ural Mountains, this week signed a framework agreement on the upgrade of a crushing plant that forms part of the Stoilensky ore-mining combine located in the Belgorod region south of Moscow.

"There is a large increase in demand from local customers," said Andrei Onufriyev, spokesman for the company.

Uralmash-Zavody customers' order book at year start was estimated at some $200 million, according to Alexander Agibalov, analyst with Aton brokerage.

"Demand for its products surged in the wake of higher profits posted by oil and metal producers," Agibalov said.

Sales to metallurgical companies made up 52 percent of company revenues last year; some 23 percent of revenues came from mining companies and 8 percent from oil producers.

However, despite growing sales Uralmash-Zavody does not generate enough cash to sponsor an ambitious restructuring program aimed at transforming it into a global player.

"That would take an increase in sales of, probably, tenfold the current level in the long term," Onufriyev said.

Despite having large tax arrears on its books, Uralmash-Zavody intends to tap Western capital markets placing American Depositary Receipts at the end of 2000 or at the start of the next year. Though some analysts said an ADR placement could be a flop due to low demand for local securities on international markets.

The company also intends to continue spinning off some of its non-core businesses, concentrating on machinery production.

Uralmash-Zavody announced it had sold a steel mill to steelmaker Severstal last week for an undisclosed amount of money, but industry insiders say the mill's sales generated some $20 million, about one-tenth of its market value.

But Uralmash-Zavody was happy to exchange the mill for an option to buy 100,000 metric tons of metal at a discount from Severstal and some cash.