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Apr 28, 2017

Russian Railways announces FY2016 results according to IFRS


The consolidated financial statements of Russian Railways and its subsidiaries ("Group") prepared in accordance with International Financial Reporting Standards comprise the financial results of over 192 of its subsidiaries.

The Group’s total revenues for the year 2016 increased by 7,1% year-on-year and amounted to 2 133 billion rubles (1 991 billion rubles for the year 2015).

Cargo and infrastructure access revenues grew by 5,2% to 1 324 billion rubles which was mainly driven by the tariff indexation for cargo rail transportation at 9% and cargo volumes increase of 1,6%. Herewith a change in a cargo structure in favor of low-profit types of cargo and provision of discounts on certain routes had a restraining impact on the freight traffic revenues of the RZD Group. Passenger revenues increased by 13,4 % to 219 billion rubles due to increase of passenger turnover in amount of 3,4% compared to the previous year, tariff indexation in the deregulated segment and reduction of VAT rate to 10%.

Revenues in logistic segment increased by 14,4% to 352 billion rubles due to higher revenues of GEFCO international sales and due to devaluation of ruble in 2016 on average comparing to 2015. A share of logistics’ revenues amounted to 16,5 % of the consolidated sales in 2016.

The Group’s operating costs (excluding loss on impairment of property, plant and equipment) increased by 3,7% year-on-year over the reporting period to 1 953 billion rubles. Major drivers of costs’ growth were increase in expenses on electricity given the tariff indexation in that segment, higher staff costs and increase in purchased freight forwarding and logistics services. Increase in labor costs of 2,3 % is related to salaries indexation (by 3,9% on average in 2016) and has been partly compensated by optimization measures taken in 2016. Higher expenses for purchased freight forwarding and logistics services from subcontractors are attributable to significant growth of logistics operations on international markets and are fully compensated by revenues in logistics segment.

Furthermore, due to increased operational efficiency The Group was able to ensure additional funding without debt financing for capital repairs and maintenance of railway infrastructure in the amount of 15 billion rubles. This has allowed not only to increase the railways’ capital repair volumes but also to prevent the growth of excess cargo carrying tonnage kilometers.

Moreover, in 2016, The Group spent 0,8 billion rubles from own funds on events dedicated to “Passenger’s Year” in order to increase client base and raise operational efficiency of the passenger transportation.

As a result of implemented actions cost of transportation increased by only 0,8% within severe price pressure, which is significantly lower than annual inflation (7,1%).

The Group generated EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) of 443 billion rubles in 2016, which is 15,4% higher compared to 384 billion rubles in 2015. EBITDA margin was at 23,6% up from 21,8% a year ago due to revenue growth and optimization of operating expenses thanks to higher efficiency of the Company’s operations.

The Group’s net profit amounted to 10 billion rubles over the reporting period compared to 8 billion rubles a year ago. The positive result in 2016 was determined by improved operational performance as well as positive effect of ruble strengthening, which helped to reduce effect of property impairment.

The Net Debt to EBITDA ratio was at 1,94x as of 31 December 2016 compared to the corresponding figure of 2,34x as of 31 December 2015. Lower level of this ratio is explained by higher EBITDA in 2016 compared to 2015 and lower rouble equivalent of the Group’s debt obligations due to ruble at the reporting date compared to the beginning of the period. EBITDA to Net Interest Expenses ratio (including capitalized interest expenses) amounted to 5,4x as of 31 December 2016 compared to 4,8x year before. Increase is determined by outperforming growth of EBITDA compared to interest expenses.

The Group’s capital investments for 2016 totaled to 450 billion rubles comparing to 406 billion rubles a year ago. RZD continues implementing its investment projects focused on renewal of locomotives, ensuring necessary capacity on key routes as well as safety of rail infrastructure including fulfillment of infrastructure projects under the state transportation development programs. 


JSCo Russian Railways was created on October 1st, 2003 pursuant to Decree of the Russian Government № 585 "On foundation of Open joint Stock Company "Russian railways" dated 18 September 2003. TheCompanyis 100% owned by the Russian Government.

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