United Wagon Company announce announces operational results for 2Q and 1H 2016

PJSC «Research and production corporation «United Wagon Company» («RPC UWC» or the Holding) (MOEX: UWGN), the leader in innovative railcar building in the 1520 mm track gauge zone, announces its operational results for the second quarter and the first half of 2016.

In 2Q 2016, the production output was 3.8 thousand railcars, 15% higher than for the same period last year. The 1H output also grew 15% to 6.8 railcars.  The positive dynamics has been reached due to enlarging production facilities and growing demand.

In 2Q the Holding obtained certificates for 2 new railcar models, as the result UWC’s product portfolio is now represented by 24 railcar models.

In 1H 2016, 70% of railcars made by UWC were purchased by third parties.  The Holding entered into large value contracts with the leading Russian producer of methanol Metafrax, railway operators VM-Trans and Lokotrans and leasing company BUSINESS ALLIANCE. The demand from external customers grew thanks to the recovery in the railway business and excellent economic and operational characteristics of new generation railcars.

As at the end of the period, the size of the fleet owned or controlled by UWC was 28.6 thousand railcars, a 5% growth compared to the start of 2016.

Vostok1520, a railway transport company, continues improving its logistics and expanding the number of block train shipments. With these measures in place coupled with high efficiency of new generation railcars, the operational performance is even better than anticipated. While the average fleet growth in the reporting quarter was 124% year-over-year to 16.9 thousand railcars, the shipments gained 149% to 5.6 million tons. The freight turnover increased 187% to 25.1 billion tkm due to a larger average shipment distance and a significant acceleration in railcar turnaround time. In 1H 2016, Vostok1520 raised its share in export coal haulage to 11.6%, an increase of more than 3 times in a year.

The statistics for 1H show that the number of current uncoupling repairs for TVZS’s new-generation railcars was up to 12 times below the network average. The Holding has an expanded service centre network operating at railcar repair shops in the CIS to render timely and high-quality maintenance to its railcars. In 2Q 2016, the network enlarged to include 3 new service centres (in Valyiki, Kurgan and Nakhodka), their total number reaching 54.