Druzhkivka Machinery gets UAH 51 mln equipment order

Druzhkivka Machinery (DRMZ UK) was selected by Sverdlovantratsit, a state-owned coal mining company, to provide it with UAH 50.6 mln in equipment, local media reports indicated yesterday. The companies signed a relevant agreement in December 2009. Yegor Samusenko: In 2009, Druzhkivka Machinery received orders from state mines totaling UAH 898 mln, according to official tenders. The orders came to 1.3x of 2008 annual sales and 3x higher than sales in 9M09, which halved yoy. We believe all the orders will be completed in 2010-2011 and were delayed due to low cash flows into the state mining sector. We attribute the delay to lower demand for energy coal and the presidential election campaign, which saw the government prioritize wage increases and defer investments. We are positive on Druzhkivka Machinery’s sales outlook and expect 50% growth in 2010E.