UWC 1Q 2018 Operational Results

PJSC “Research and production corporation “United Wagon Company” (“UWC”, the Holding or the Company) (MOEX: UWGN), the leading builder of innovative railcars in the 1520-mm track gauge zone, announces its operational results for 1Q 2018.

In the reporting period, according to its plan Tikhvin Freight Car Building Plant switched its assembly line used to manufacture 25-tf solid-bottom gondolas to production of the next generation gondolas with 27-tf bogie. Recommissioning caused a one-off decrease in the output: In 1Q 2018, the Holding manufactured a total of 4.2 thousand railcars, a 10% below the figure for the same period in 2017. The production of hopper cars, however, increased by 50% year-over-year to 1.1 thousand units, their share in the production pattern reaching 25%. The output of other railcars grew by 159% to 461 units with their share increasing three-fold to 11%. The share of specialized cars in total grew from 23% to 40%.

UWC’s management estimates the production dynamics to be positive in the upcoming quarters and confirms that the Company’s production target for 2018 is 19-20 thousand railcars. The Company will be further diversifying its production, which ensures that specialized rolling stock share in total output will be increasing.

Company’s product line was expanded to include a total 54 railcar models and modifications. In the reporting quarter, the Company has certified three railcar models: a grain hopper car mounted on a 25-tf bogie with a 126-m3 cylindrical body and two gondolas including the one mounted on a 27-tf bogie with a 103-m3 body and a carrying capacity of 82 tons.

100% of newly produced railcars were sold to third parties under direct contracts. The largest supplies were made to GTLK (gondola and hopper cars), Logistics 1520 (hopper cars), Acron (hopper cars), and MKB-leasing to be subsequently exported to the far abroad (gondola cars). The total number of railcars supplied to these companies in 1Q was 3.2 thousand. The Company also delivered railcars of various designations to Kronospan, PhosAgro, Gazpromtrans, and Uralchem.

The Company’s railcar fleet reduced by 2% compared to the 2017 end to 13.1 thousand units, after the sale of 225 old-type box cars. As a result of the transaction, the proportion of the fleet’s standard railcars decreased from 19% to 17%.

In 1Q, the number of tank containers operated by UNICON 1520 transportation company grew by 21% compared to late 2017 to 775 units, and the total railcar fleet increased by 15% to 389 units (including flat and tank cars). Total shipments stood at 49.5 thousand tons, a 8% increase over 4Q 2017.

UWC continued expanding its service network for new generation rolling stock in the reporting quarter. The Company inaugurated two new service centres authorized to provide scheduled maintenance (Category-I) located at railcar repair facilities of Novotrans on the Moscow and West-Siberian Railways. As result, the number of Category-I service centres reached eight with an aggregate of 68 service centres currently in operation.