Kirov Plant sells turbines - Newspaper Kommersant No. 177 (7378) dated 09/26/2022
According to Kommersant's information, the Kirov Plant is looking for a buyer for its Kirov-Energomash (KEM) enterprise, which produces steam turbines for nuclear icebreakers. The main contender for the purchase, according to Kommersant, is Rosatom, which continues to consolidate shipbuilding competencies. Now the asset is being evaluated, but given the constant accusations against the plant due to delays in the production of turbines for nuclear icebreakers under construction, the cost can be reduced. The entry of KEM into the Rosatom circuit looks logical, analysts say, since it will increase the efficiency of the production of icebreakers and floating power units.
PJSC Kirovsky Zavod plans to sell its Kirov-Energomash enterprise in St. Petersburg, market sources told Kommersant. Several interlocutors of Kommersant call the main contender for the purchase of the asset Atomenergomash (AEM, the machine-building division of Rosatom), with which negotiations are already underway on the sale. According to Kommersant, the United Shipbuilding Corporation (USC) is also interested in the asset. The enterprise is currently being valued. PJSC Kirovsky Zavod, according to unofficial information, is controlled by the family of the former general director of the group, Georgy Semenenko.
KEM manufactures steam turbine units (STP) for nuclear icebreakers and floating nuclear power plants, and also supplies turbines and other equipment for the navy. In the structure of the company's revenue for 2021, products for the civilian fleet reached 55%, for the Navy - 38%, according to the annual report. Last year, according to SPARK, KEM's revenue amounted to 2.19 billion rubles. (minus 42% year-on-year), net profit - 141.1 million rubles. (plus 92%).
In the civil sector, KEM's key customers are Baltiysky Zavod (part of USC) and AEM. Baltzavod ordered turbines from KEM for nuclear icebreakers of the Arktika type (60 MW). USC repeatedly accused KEM of failing to deliver turbines, which delayed the construction of icebreakers. USC is still suing KEM and is trying to recover penalties for disrupting supplies.
In 2021, KEM received a major order from OKBM Afrikantov (part of AEM): the plant is to supply four sets of STPs of 58 MW each for floating power units designed to supply power to the Baimsky GOK (KAZ Minerals copper-gold project) in Chukotka. The first set should be ready in 2023, the rest - in 2024, 2025 and 2027, respectively. The cost of the contract is 16.5 billion rubles, which, according to Kommersant's sources, last year was lower than the economically justified price.
The ongoing litigation with USC can significantly reduce the cost of selling the plant, Kommersant's interlocutors say. At the same time, the plant was modernized, the only stand in the country for testing turbines with a capacity of up to 75 MW was built there, some of them specify.
“Given the great commercial potential of the new product - PEBs, for which AEM is responsible from start to finish, AEM is exploring all available opportunities for concentrating capacities for their production and equipment within the division,” AEM told Kommersant. They noted that all work on the project for the Baimsky mining and processing plant is "carried out in a busy mode", with regard to both buildings and equipment. The situation with the production of steam turbine plants is under special control due to the restructuring of cooperation chains caused by the current geopolitical situation, AEM noted. USC declined to comment. The Kirov Plant did not respond to a request.
The revenue of PJSC "Kirovskiy Zavod" under IFRS in 2021 amounted to 41.57 billion rubles. (growth by 19% year on year), profit - 763 million rubles. (minus 17.6%). In the income structure of the Kirov Plant, the share of KEM's revenue does not exceed 10%, but it is this dual-use enterprise that obviously forms the main sanctions risks for the entire group, says Mikhail Burmistrov, head of Infoline-Analytics. In his opinion, the withdrawal of KEM from the business structure is a logical step to increase the sustainability of the group. “The Kirov Plant has other promising areas, in particular, it has the potential to increase the output of tractor equipment: the country's largest St. Petersburg Tractor Plant has a contract with Rosagroleasing for the supply of 1,000 tractors by the end of the year, which is 20% more than in 2021,”— analyst notes. Now Rosatom continues to form on the basis of AEM a center of competencies related to shipbuilding, therefore, he believes, the consolidation of key assets for the production of equipment for icebreakers and floating units looks like "the most effective solution to accelerate the construction of new facilities."