CJSC AK&M Rating Agency confirmed the 'A' credit rating (stable outlook) assigned to OJSC SOLLERS as per the national scale.
The 'A' rating indicates that OJSC SOLLERS qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.
Today, the core activity of OJSC SOLLERS is related to managing assets of OJSC ZMZ, OJSC UAZ, SOLLERS Far East LLC, and marketing of automobiles. The group of companies SOLLERS is principally engaged in the production and sale of automobiles, engines, assembly facilities and vehicle components.
O ne of the strategic development priorities for OJSC SOLLERS is to create a customer-focused company offering a whole range of automobile-related services. OJSC SOLLERS pursues its strategy through partnerships with foreign manufacturers in the most promising segments of the Russian automobile market including commercial vehicles, off-road vehicles and light passenger vehicles, as well as dealerships and customer services.
The Company's rating is supported by the rising profit and incomes of the SOLLERS group (according to consolidated financial statements), commitment of OJSC SOLLERS to joint ventures with major international automobile makers, the growing market position, the fairly high diversification of products, and the high transparency.
The SOLLERS group is operating above the break-even point. In 2012, the overall profit growth trend continued. According to the group's consolidated financial statements for the first half of the year, profit from operations totaled RUB 3.4 billion, net profit amounted to RUB 2.6 billion (against RUB 897 million for H1 2011). This, implying a considerable increase in annual profits in 2012 against 2011, naturally supports the Company's rating.
As of today, OJSC SOLLERS is participating in five joint ventures: FORD SOLLERS (established together with Ford Motor Company), SOLLERS ISUZU (the other party being ISUZU Motors Limited), SOLLERS BUSSAN (with Mitsui and Co), MAZDA SOLLERS (with Mazda Motor Corporation) and SOLLERS FINANCE (with Sovcombank ICB LLC). These business ties enable OJSC SOLLERS to constantly expand its product range and hence to update the model line-up. The diversification of products improves the Company's presence in automobile markets. Benefiting from both its joint ventures and own production capacities, OJSC SOLLERS is in a position to cover most of the automobile manufacture segments, with a competitive edge against the major automobile makers of Russia.
Another argument for the SOLLERS group's rating is its stronger market position in a number of segments (except for the lorry manufacture). For instance, the joint venture with Ford will enable the Company to ramp up production in the LCV segment considerably (today, the SOLLERS group ranks second in the manufacture of LCVs among domestic automobile makers, with a ca. 25% market share in the LCV+MPV segment for the UAZ and Ford brands). In January-November 2012, the SOLLERS group ranked 8th in the sales volume and 5th in the sales growth rate among automobile makers in the segment of imported and locally produced cars (4th and 2nd, respectively, among the groups of companies manufacturing cars in the Russian Federation). Combined share of the SOLLERS group and the Ford SOLLERS joint venture in the market of passenger cars and LCVs is about 8%.
The fairly high product diversification adds to the Company's market stability. SOLLERS Group's product line is well-diversified, especially against the background of its domestic competitors. The Company produces automobiles of different classes and in different price segments. The Company's commitment to joint ventures expands its product range.
The high transparency at OJSC SOLLERS also supports its rating. The Company's website provides exhaustive information concerning its KPIs, corporate structure, products & services, management and ultimate beneficiaries, along with a full package of official documents and reports made available on account of the Company's type of business (an open joint stock company). For analysis purposes, the Company used to provide information promptly and in due form.
At the same time, the aftermath of Russia's accession to the World Trade Organization and the dependence on the macroeconomic environment exert pressure on the Company's rating.
OJSC SOLLERS faces a risk of shrinking sales in the wake of a tougher competition brought about by Russia's accession to the World Trade Organization. Reduced import duties resulting from Russia's accession to the World Trade Organization may step up competition from foreign automobile makers and increase their market share in Russia, endangering the group's higher sales ambitions. This possible negative impact is partially offset by the overall market growth – which, coupled with Russia's industrial foreign car assembly regime and a number of protectionist measures, will mitigate the risk of lower sales.
Another negative signal for the Company's rating is its high dependence on the macroeconomic environment. Facing a downside scenario play out in the domestic and global economy, both legal entities and individuals may cut down their expenses, resulting in a lower demand for automobiles.
SOLLERS is one of leading automobile manufacturers in Russia. It owns controlling stakes in several vehicle manufacturing enterprises, unites UAZ (Ulyanovsk Automobile Plant), ZMZ (Zawolzhsky Motorny Zawod), SOLLERS Far East and other production assets. SOLLERS Group's enterprises produce domestic UAZ off-road vehicles, SsangYongs automobiles (South Korea), as well as gasoline and diesel engines ZMZ. SOLLERS is implementing a number of projects in the form of joint ventures, namely: manufacture and distribution of Ford, Isuzu, manufacture of Mazda, Toyota, and leasing services. Besides, the company is developing a dealership chain. OJSC SOLLERS has placed two interest-bearing bond issues 02 and BO-2, currently in circulation.
This press release is based on the statements of assigning credit ratings to OJSC SOLLERS, as well as bonded loans 02 and BO-2.
The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Company.
CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.
CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).
AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base and for listing bonds). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Press release by: A.V. Yakovenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.