Bulgarian Military Industrial Complex Revenues Plummet in Q1

After a couple of years of rapid growth because of military conflict all over the world, the Bulgarian military industrial complex has marked a drop in sales for the first quarter of 2018. The information comes from official reports by state-owned military factories. 

One of the factories that has suffered the most is the Sopot-based VMZ whose revenue for the quarter has dropped by two thirds. "Kintex" is also selling less - but it isn't doing as bad as VMZ. The only factory that hasn't marked a decrease in revenue is "Avionams" - a factory for aircraft repair. Last year "Avionams" was nationalized and is currently state-owned. Private companies are yet to report on their first quarter but experts believe that state-owned factories are not an exception but a part of a bigger trend. 

The military industry is a cycle - it heavily depends on politics, conflicts, and needs. Since VMZ mainly produces specialized military gear it heavily depends on who needs it. The countries that usually work with VMZ are currently heading towards a calm future and do not buy as much. This is the main difference between VMZ and "Kintex". "Kintex" relies on lasting contracts. For instance, "Kintex" has a contract with the Indian military which makes India a stable market for the company. According to two independent sources quoted by Capital.bg the private company "Arsenal" has already begun to cut back. Other factories rely on "natural processes" such as retirement and people simply quitting their jobs. 

The reports by VMZ show that the revenue for Q1 of 2017 is 200% higher than the revenue for Q1 of this year. Even more troublesome are the profits of the factory - they have dropped 23 times or by 96%. In Q1 of 2017, revenues sat at 93 million, which plummeted to 31 million. Expenses have also dropped by 40% meaning that the factory does not have that much work. The company's debt has fallen by BGN 6 million thanks to in-advance payments by some clients. By the end of the year, VMZ's management is expecting orders and contracts for over BGN 220 million. 

"Kintex", on the other hand is doing much better despite also marking a decrease. While revenue has dropped by 27% profits have only dropped by 8%. When comparing Q1 of 2017 with Q1 of 2016, one could see that "Kintex" can do better. The revenue of the company increased by 304% last year and the profits by 1332%. At the same time, ever since 2016 VMZ has been going down on both revenue and profits. 

The only company not losing money is "Avionams". However, the increase in revenue they mark is only 11% . The report for Q1 of 2017 points that the company had lost  BGN 1.5 million but now has BGN 0.5 million in profits.

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Vasil Manev

Vasil Manev is a student in Computer Science and an aspiring columnist, studying in Heidelberg, Germany.

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