Basic Element | 22 June 2007 г. | 11:06

Basic Element announced a 40% increase in revenue to $18.475 billion in 2006

In 2006 Basic Element divided its businesses into five sectors. The largest sector, which is energy (En+), includes UC RUSAL, Eurosibenergo, United Oil Group and Salamon Enterprise. En+ revenues increased 47% to $10.869 billion. Sales in the manufacturing sector, which includes Gorky Automotive Plant, Abakanvagonmash and Aviacor, increased 29% to $4.541 billion. Revenues in the financial services sector, which consists of Ingosstrakh, Bank SOYUZ and Element Leasing, increased 30% to $1.476 billion. Sales in the construction sector, which includes BaselCement and Glavstroy, increased 85% to $1.045 billion, while sales in the company’s resources sector, which includes Soyuzmetalresourse, Continental Management and Jany Jyldyz Gold, increased 6% to $544 million.

The CEO of Basic Element Gulzhan Moldazhanova credits the company’s strong performance in 2006 to “high commodity prices, exceptional growth in many of the company’s core sectors and Russia’s strong economic fundamentals.” In addition, Basic Element's successful strategy of entering new markets and attracting leading international technologies also contributed to the company’s strong growth. “Last year we strengthened our cooperation with foreign companies. We also sought to attract leading specialists and technologies from around the world to increase the efficiency of our businesses in Russia,” said Moldazhanova.

The merger of RUSAL, Glencore and SUAL in the energy sector formed the world's largest aluminum producer, UC RUSAL.

The most prominent acquisition in the manufacturing sector last year was that of LDV, a British LCV manufacturer. “It would have taken us at least 10 years to develop the technologies used at LDV plants,” said Moldazhanova. “This acquisition gave our people invaluable expertise.”

The total revenues of the INGO Group, which includes Ingosstrakh and its subsidiaries in the CIS, Finland, Germany and Austria, reached $1.6 billion. INGO Group showed record profits thanks to rising revenues in all markets where it is present.

Companies in Basic Element's resources sector acquired stakes in the Mongolian gold mining company Batu Mining and coal company Gobi Coal Energy.

Last year Basic Element strengthened its management team considerably. Key hires included the Head of the Construction Sector Douglas Lund, who has more than 40 years of experience working on construction projects in the US, Czech Republic and a dozen other countries. Olga Zinovieva was appointed as Head of the Financial Services Sector, and Alexander Lukin, who previously worked for Deutsche UFG, was appointed to the position of CFO.

Basic Element continued to move towards implementing high standards of transparency and corporate governance. In July, the company disclosed for the first time key financial data on all businesses in which it has a 20% or more stake. In addition, Basic Element adopted its own corporate code of ethics.

In early 2007 the company created a sixth sector - infrastructure and development - and appointed Lawrence Mahon as its head. Prior to joining Basic Element, Mahon managed infrastructure construction projects in Europe for over 20 years.

This spring, Basic Element reached an agreement to acquire a 30% stake in Strabag and nearly a 10% stake in Germany’s Hochtief, which specializes in the construction and management of airports. The company also agreed to acquire nearly a 20% stake in Magna, a Canadian auto parts producer.

According to Moldazhanova, Basic Element’s 2007 priorities include development of the infrastructure construction sector and introduction of new technologies to the domestic automotive industry.

Source: Metal Supply and Sales
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