OJSC Russian Railways announces 6 months 2018 results according to IFRS
The consolidated financial statements of OJSC Russian Railways and its subsidiaries
("Group") prepared in accordance with International Financial
Reporting Standards (IFRS) and comprise the financial results of 192 subsidiaries.
The Group’s total revenues for the first half of 2018 increased by 7.6% compared
to year ago and amounted to 1 164 billion rubles (1 082 billion rubles of revenues
for the same period of 2017).
The highest growth among revenues belongs to revenues from cargo and infrastructure
access that grew by 4.8% for six months of 2018 and amounted to 751 billion rubles.
The growth is mainly driven by the increase of cargo turnover by 4.3% and cargo tariff
indexation. The growth of the segment revenues was limited by the rise in the proportion
of low-margin goods in the Group’s freight turnover.
Logistics revenues increased by 19.6% up to 198 billion rubles due to the growth
of ruble equivalent of GEFCO’s revenue from international operations given the
weakening of ruble average exchange rate comparing to a year ago. Total revenue of
GEFCO increased by 6.2% and amounted to 2.4 billion euro.Passenger revenues increased
by 4.4% up to 106 billion rubles due to 5.7% volume gain of passenger traffic as a
result of marketing initiatives and increase of high speed transportation revenues.
The Group’s operating costs amounted to 1,059 billion rubles and increased
by 7.3% compared to the previous year (987.2 billion rubles for the first half 2017).
Major drivers of costs’ growth were increase in transportation volumes, growth
of repairs- costs of infrastructure and rolling stock, substantial growth of diesel
fuel prices. Increase in labor costs by 6.1% was related to salaries indexation (by
4% for operating personnel and by 2.5% for the remaining categories of employees in
October 2017 and by 2.2% for all categories of employees in May 2018) and employees
transfer from part-time to full-time employment. Work productivity increased by 6.5%
due to the implementation of technical and technological programs.
The Group’s EBITDA increased by 4.7 % compared to the same period last year
up to 256.2 billion rubles (244.7 billion rubles for the first half 2017). The EBITDA
margin for the reporting period amounted to 25%.
The Group’s net profit increased by 21.5% compared to the first half of 2017
and amounted to 64.8 billion rubles determined mainly by stronger operational performance.
The Group’s capital investments over the first six months 2018 totaled to
281 billion rubles comparing to 254 billion rubles over the same period in 2017. 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
Annual Group’s capital investment program for the year 2018 amounts to 568
The net debt to EBITDA ratio was at 2.08x as of 30 June 2018, compared to the corresponding
figure of 1.97, as of 31 December 2017. Relative increase in Company’s debt
loan load is caused by credit portfolio expansion in order to finance extended investment
program and also by growth of foreign currency liabilities in ruble equivalent given
the ruble depreciation to certain international currencies comparing to the beginning
of the year 2018.
EBITDA to net interest expense ratio (including capitalised interest expense) amounted
to 6.8x over the reporting period comparing to 6.3x a year ago. The ratio substantially
exceeds 4.0 minimal threshold established in the Company.
OJSC Russian Railways was created on 1 October 2003 pursuant to Decree No. 585
of the Russian Government "On the Foundation of the Open Joint Stock Company Russian
Railways" dated 18 September 2003.
The Company is 100% owned by the Russian Government.