Highlights from Almaz-Antey 2008 financial report

Said Aminov, editor of Vestnik PVO web site (www.pvo.su)

For several years now the leading Russian manufacturer of air defense systems, Almaz-Antey, has been publishing its annual financial reports. The 2008 report is especially interesting since it contains detailed information on the group's finances, R&D program and export contracts.

According to the report, the entire group's consolidated revenue from core activities reached 88.8bn roubles (about $3.3bn) in 2008 - up 37.1 per cent on the previous year. The group's head company reported that its own revenues from core activities were up 73.1 per cent to 26.13bn roubles. By that indicator Almaz-Antey remains Russia's biggest defense contractor.

The group normally exports its air defense systems via Russia's state-owned Rosoboroneksport intermediary. Revenues from direct exports of spare parts and components, as well as contracts for maintenance of previously exported equipment, added up to a mere $12.6m in 2008. The absolute figure is not very impressive - Sukhoy, a combat aircraft manufacturer, exports $200m worth of spare parts every year - but it still represents a six-fold increase on 2006 (no figures are available for 2007). Considering how much military equipment Almaz-Antey has already sold abroad, and how much it keeps selling, the direct repair and maintenance contracts are expected to become a much larger part of its portfolio.

The report also contains a list of countries Almaz-Antey is dealing with. Interestingly, it includes the United Arab Emirates, Oman and Kuwait, although there has been no recent reports about Russian military exports to these countries in the Russian media. There have been mentions of the proposal to build an air defense system for the UAE based on the Russian S-400 (SA-21) SAM system, but in 2008 the country opted for the US-made Patriot PAC-3 instead.

The list does not, however, include Venezuela, which, according to media reports, has been planning to buy the Russian Tor-M1 and Tor-M2E (SA-15) mobile SAM systems. And in September 2009, Venezuelan President Hugo Chavez, fresh from a visit to Moscow, announced several large contracts to buy Russian weapons, including the S-300V (SA-12/SA-23) SAM system . Nether does the list include Saudi Arabia, which is apparently in talks with Russia to buy air defense equipment. Various media reports , as well as Almaz-Antey's annual financial report itself suggest that such talks have indeed taken place. The document says that in 2008, the concern "developed and submitted to Rosoboroneksport a proposal on setting up a comprehensive system of repair and maintenance of the Triumf and Antey 2500 missile defense systems for foreign customer 682" - 682 being the Russian code for Saudi Arabia .

This has been the first official mention of a proposal to export Antey 2500 (S-300VM) (SA-23) for several years. The document also says that in 2008, the company finished the assembly of the test samples of the modernized S-300V system, as part of the Modern-2 R&D project. The system includes a command station, a multi-channel missile guidance station, a launcher and a radar station . All that suggests that the company continues to work on improving the S-300V system and its updated Antey 2500 version, and that both systems are being marketed abroad. Antey 2500, when paired with the powerful S-400 Triumf (SA-21), can offer the potential foreign buyer (such as Saudi Arabia) an impenetrable system of defense against aircraft and non-strategic missiles. That could translate into a major boost for Almaz-Antey's exports.

The R&D-related parts of the report worth a separate mention include the completion of several research project under the program of Russia's future aerospace defense strategy, including the Razvitiye-KTVD-25 and the Vozrozhdeniye research projects. Almaz-Antey has also produced schematic designs for the Triumfator-M project (which is apparently an improved version of the S-400) , Morfey (presumably referring to the ultra-short range air defense system Morfey) and Vityaz-PVO (presumably the medium-range air defense system Vityaz) . It has also completed early designs for a proposed new automated system of air force and air defense command. Meanwhile, the Tikhomirov instrument-building research institute has built the first sample of an active phased array airborne radar for the T-50 fifth-generation fighter being developed by the Sukhoy bureau.

The report also says that in 2008, Almaz-Antey manufactured several sets of the 40N6 ultra-long range (up to 400 km) anti-aircraft guided missiles designed by MKB Fakel . The missiles were needed for the state trials of the 40R6 system (S-400 Triumf) . There have been reports in the Russian media that first deliveries of the 9M96 missiles and the long-range 40N6 missiles designed specifically for use with the S-400 are not expected before 2010 .

Almaz-Antey has also been working to modernize its Buk (SA-11/SA-17) series of its air defense systems. The introduction to the report by the group's director-general, Vladislav Menshikov, mentions R&D work on the project to modernize the Buk-M2E system (for a foreign customer) and to upgrade the Buk-M2 (SA-17) systems to the Buk-M3 level (for Russia's own armed forces). The report also mentions that the company has completed the installation and tuning of the 9S18M1-3 radar for Buk-M3. It has also completed comprehensive preliminary trials of the Buk-M1-2A system equipped with the 9M317A active radar homing seeker . That latter system is now awaiting state trials. The commander of the Army Air Defense, Nikolay Frolov, said in September 2007 that first deliveries of Buk-M3 to the Russian Armed Forces will be made in 2009. In addition, the 2006 annual report of the NPP Dolgoprodnenskiy company (which is part of the Almaz-Antey group) mentioned plans to complete the development of three new versions of missiles for the Buk SAM systems - 9M317A, 9M317M, and 9M317ME - by 2009. It also said the company had begun developing the 9M317MAE missile for export markets.

Almaz-Antey is also working on short-range air defense systems, including the Tor (SA-15) SAM system. Its Tor-M2 system equipped with the 9M311 missile passed state trials in 2008. Tor-M2 in a combination with the 9M338K missile successfully completed comprehensive preliminary trials in the same year. The company has also been developing the export version of the system, Tor-2ME. Army Air Defense commander Nikolay Frolov said in December 2007 that first deliveries of Tor-M2 to the Russian armed forces were expected in 2009. It was said that the system would be equipped with improved missiles, and its combat performance figures would more than double compared to the previous version . Whereas the export version, Tor-M2E, is still equipped with the standard 9M331 missile, the version for the Russian army will probably come with the new 9M338K.

The report also says that due to the deficit of the GM-352M1 tracked chassis for the Tor mobile launchers, and of the GM-355A chassis for the Tunguska (SA-19) tracked gun-missile air defense systems, Almaz-Antey has submitted a proposal to the Russian Defense Ministry to resume the production of these chassis at the Minsk Tractor plant in Belarus.

Also in 2008, the company's Kolchan SAM system equipped with the 9M330 missile passed the first stage of the state trials. This is a modernized version of the Kinzhal (SA-N-9) naval short-range missile system. It is being developed as part of the navy ships modernization program.

Finally, the Almaz-Antey annual report mentions the completion of preliminary trials of Product 3M14 as part of the Kalibr R&D project . This is a conventional submarine-launched land-attack cruise missile developed by OKB Novator design bureau.

References

Источники информации

Said Aminov. "Highlights from Almaz-Antey 2008 financial report" // Moscow Defense Brief, #4 (18), 2009

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