On August 13, 2020, Russia's Analytical Credit Rating Agency (ACRA) affirmed the credit rating of JSC Concern Kalashnikov at 'A'(RU), with a stable outlook, the rating agency informed.
The credit rating of JSC Concern Kalashnikov (hereinafter, Kalashnikov, the Company, or the Concern) is based on its a- standalone creditworthiness assessment (SCA), which has been adjusted one notch upward to a due to its high strategic importance to the state. This provides additional support to the rating. The Company's SCA is based on its strong market position as Kalashnikov is the leader in its segment. The average corporate governance assessment has a neutral impact on the Company's rating. The Company's operating risk profile is aa- due to a combination of factors. The assessment of the financial risk profile (bbb-) is a reflection of the Company's medium size of business, very high profitability, and strong liquidity position. The financial risk profile assessment, and consequently the Company's SCA, are constrained by the high leverage, medium debt service indicators, and weak free cash flow (FCF) assessment.
Kalashnikov is Russia's largest manufacturer of firearms, the main supplier of small arms to the Russian Armed Forces, and controls the manufacture of high-precision guided weapons for army aviation. The Company is a successful example of transformation of a loss-making state-owned company into a promising multi-faceted holding thanks to private investors. Rostec State Corporation holds 25% plus one share in the Concern and 75% minus one share belongs to private investors.
