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30.05.2005
uaBBB- credit rating assigned to Lutsk Automobile Plant
May 30, 2005 – Independent rating agency Credit Rating, Ltd. on Monday announced that it has given a long-term rating “uaBBB-” to Lutsk Automobile Plant, a joint stock company under Ukrainian law. The principal activity of the plant is production of cars and trucks.
Credit Rating also announced the awarding of a long term “uaBВВ-” credit rating to the issuance of interest bearing bonds of Lutsk Automobile Plant Joint Stock Company in the amount of 130 million UAH for a five-year period of circulation.
Factors supporting credit rating:
- during 2003-2004 net volume of production, sales and the volume of net profit at Lutsk Automobile Plant Joint Stock Company (JSC) increased considerably, to the level of 846 million UAH and 29.5 million UAH respectively at the end of 2004. The result of economic performance in the first quarter of the current year was 60 million UAH;
- Lutsk Automobile Plant (JSC) achieved positive results in its activities without applying for tax exemption or any other benefits;
- The plant is represented in almost all segments of Ukrainian automobile market. Broad product diversification in price categories makes the issuer resistant to market fluctuations;
- Lutsk Automobile Plant JSC has strategic significance for economical development of the region and for the Ukrainian automotive industry;
- The plant has an investment program that is approved by the Cabinet of Ministers of Ukraine, and in case benefits to the automobile industry are renewed the plant would be in a more favorable position than it is today.
Factors putting pressure on the credit rating:
- from the end of the 1990s until 2003, Lutsk Automobile Plant was unprofitable, therefore, the enterprise did not have the possibility to develop and only in 2004 the plant was able to cover its losses;
- the plant’s cost of production has been high for the past two years and varies at the level of 92.7 percent;
- Lutsk Automobile Plant liquidity rates are at a low level, although there are recent upward tendencies;
- Changeability of national legislation makes development of Ukrainian automobile market less predictable; it also makes development of the automobile industry in Ukraine more complicated as does implementation of the strategic program of the issuer;
- High level of dependency of the issuer on foreign suppliers.
