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Meeting with Rostec State Corporation CEO Sergei Chemezov

May 17, 2018, Sochi

Rostec CEO Sergei Chemezov reported to the President on the state corporation’s performance in 2017.

President of Russia Vladimir Putin: Mr Chemezov, you are here to deliver the annual report on the corporation’s performance. You have my attention.

Rostec Corporation CEO Sergei Chemezov: We have prepared the traditional annual report. This report comes during an anniversary year, and so I would like to present it to you today. I would like to say that we have traditionally posted positive growth in economic indicators over the course of many years, almost every year of our existence.

In particular, revenues have grown by 26 percent compared to last year and currently stand at about 1.6 trillion rubles. It was 1.266 last year, but this year we are approaching 1.6 trillion. The EBITDA grew by 14 percent to reach 305 billion rubles. Net profit grew by 38 percent to 121 billion rubles.

We have practically fulfilled the state defence order; it stands at 98.2 percent complete. This number is also higher than it was last year. However, it is more important to stress the significant increase in the manufacture of non-defence products, which totalled 548 billion rubles. That is a 47 percent increase on 2016.

Vladimir Putin: Good.

Sergei Chemezov: The share of non-defence goods in 2017 was 29.1 percent, and 25.1 a year earlier. You set us the task of making non-defence goods 50 percent by 2025. We have set ourselves a more ambitious task of reaching that target of 50 percent non-defence goods by 2020.

Deliveries of military goods via Rosoboronexport are also growing despite various forms of sanctions pressure. They have reached 13.4 billion rubles, and this is just from Rosoboronexport.

Generally across Russia, taking into account other participants in defence industry cooperation, deliveries exceed 15 billion.

Vladimir Putin: What is the average wage?

Sergei Chemezov: The average wage has reached 47,000 rubles [a month] compared to 44,000 rubles last year.

Vladimir Putin: The year before last.

Sergei Chemezov: Yes, in the 2016 reporting year, and in 2017, it was 47,000 rubles.

The net profit margin was 7.6 percent, and output per worker grew by 11.2 percent amounting to 3.1 million rubles.

Vladimir Putin: Has labour productivity grown?

Sergei Chemezov: Yes, it has. It was 2.8 million rubles in 2016, so it went up over 11 percent.

Among the most important events of the year, we can single out the successful launch of Russia’s first assembly and testing complex of gas turbine units for ships in Rybinsk. You were with us there when we launched it, and today this complex makes it possible to produce modern engines.

Vladimir Putin: For military ships?

Sergei Chemezov: Including for military ships. We did a great deal of work to prepare IT infrastructure for the World Cup. We are responsible for this.

Vladimir Putin: We should start mass production of this engine as soon as possible.

Sergei Chemezov: Yes, of course, surely.

Vladimir Putin: We need more engines.

Sergei Chemezov: Yes, we are working on this.

We were responsible for preparing IT infrastructure for the World Cup. As of today, we have formally completed this work.

Perinatal centres were also opened. We built 15 centres overall. In 2017, we opened nine centres, two more in the first quarter of this year, and recently another centre was opened. We have to finish two more centres now. I think we will complete the construction of all centres before the end of May.

Also of note is the success of the Kortezh project to design a modern car, a good limousine, which I hope you liked.

Vladimir Putin: It is a good car.

Sergei Chemezov: Our corporation was also involved in its design. You know, I have had quite a number of phone calls from wealthy Russians who would like to purchase such a car.

Vladimir Putin: I wish them all the best in that. We have to set up quality manufacturing of jeeps and sedans cars, and begin mass production.

Sergei Chemezov: As a matter of fact, this is what we are currently working on.

Vladimir Putin: So that they are affordable not only for the wealthy but people of any income, including middle earners.

Sergei Chemezov: Yes.

Vladimir Putin: Good vans which could be used as family cars.

Sergei Chemezov: By the way, we have also designed a motorcycle that was supposed to escort your motorcade but, unfortunately, we did not manage to complete it.

Vladimir Putin: Will you keep working on it?

Sergei Chemezov: Yes, certainly. It has been through basically all the tests, there is not much left to be done. It is going to be a beautiful motorcycle, every bit as good as those made by western manufacturers.

Vladimir Putin: It should be better.

Sergei Chemezov: It will be. We will work to make it better.


May 17, 2018, Sochi