Sukhoi Civil Aircaft Company – which is now test flying its Superjet 100 for service entry next year – released KPMG-audited consolidated financial results for 2008 showing a net loss of $114.7 million, a dramatic swing from net income of $3.6 million for the year-earlier period. Revenue for the year was up 9.5 times to $5.956 million. SCAC also reported a significant reduction in spending for a 1% increase in operational costs last year.

The company cited the reduction of the governmental grants in 2008 compared with 2007, as well as the weakening of the ruble against the U.S. dollar and euro from August through December of the last year by 25.3% and 13.4%, respectively. It incurred a four-time reduction in governmental grants from $66.6 million in 2007 to $16.7 million in 2008 leading to an operational loss of $44.783 million for 2008 versus $2.7 million profit in 2007.

The weakening of the ruble led to additional costs for servicing and paying debt in foreign currency, as well as costs in the form of negative exchange rate differences from revaluation of that debt. Costs on interest payments increased by 16.5 times and reached $14.402 million, costs from revaluation totaled $80.369 million. As a result the net loss for 2008 totaled $114.713 million.

Assets totaled $859.8 million, up 27.3% while net financial debt rose 66% to $784.8 million. The company cited capitalized costs for research and development among its main assets as well as capital investment (60.4% and 19.1% from total value of assets, respectively). Capital investment reached $164.612 million in 2008, which is 1.6 times more than in 2007; costs for research and development rose by 31.5% and totaled $519.129 million. The main part of costs for research and development was comprised of costs for design and tests (42.4% and 46.9%, respectively).

Total debt reached $819.256 million at the end of 2008, which is 1.4 times more than in the year 2007. Short-term debt made up 46% of the total financial debt compared with 17% a year earlier. Short-term debt totaled $376.767 million, including a 10-year loan from EBRD for $141 million (the company received an official letter from EBRD in April of 2009, according to which the bank is not planning to demand an early repayment of the loan) and a 5-year loan from Bank Intesa for $25 million. The worsening of the availability of financial resources has impacted the average cost of the company’s financial resources, which rose from 8.06% in 2007 to 8.37% in 2008. However a positive long-term factor for the company’s financial stability is growth of the average term of attracted credit resources from 8.3 years to 9.3 years.

“When looking at this financial report one should consider a fact that SCAC’s revenue for now reflects only the cost of the company’s completed research and development projects, since we are an executor of the Russian Federation’s federal program for development of the civil aviation regarding the creation of the family of regional aircraft,” said SCAC’s Senior Vice President for Economy and Finance Maxim Grishanin, “Excluding the exchange losses in the second half of 2008, SCAC’s financial results correspond to the current investment stage of development, during which we are beginning the mass production of the aircraft and are completing the certification of our product. The indicators of the report will become more revealing when they include revenue from the main business activity — which is aircraft sales.”

Grishanin cited the back of the government at a time of economic uncertainty as a company strength noting the increase in state funding for the SSJ100 project by 3.6 billion rubles for financing of engineering efforts, as well as 3.2 billion rubles to increase charter capital of the Sukhoi Holding Company for financing the SSJ100 project. He also noted that closing its partnership deal with Alenia which recently acquired a 25%-+-1-share stake in the company, increases the capital in the company.

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