UWC’s Consolidated Financial Results for 2017

PJSC “Research and production corporation “United Wagon Company” («UWC», the Company or the Holding) (MOEX: UWGN), the leading innovative railcar builder in the 1520-mm track gauge zone, reports its audited IFRS consolidated financial results for the year 2017.

Key indicators over the reporting period:

  • UWC’s consolidated revenue grew 28% to RUB 62.0 billion
  • The Holding’s EBITDA decreased by 7% to RUB 12.7 billion
  • The Holding’s EBITDA net of subsidies grew by 14% to RUB 12.0 billion


UWC’s consolidated revenue grew by 28% compared to the same period last year reaching RUB 62.0 billion owing to the revenue growth observed in the Production and Lease divisions.

The revenue generated by the Production division grew by 26% to RUB 54.7 billion spurred by increases in the railcar sales volumes and selling prices. RUB 12.9 billion out of the total revenue earned by the division comes from the sale of railcars to the Holding’s own lease company aiming to substitute its used railcars sold earlier. The revenue received from the sale of the used cars was RUB 14.1 billion. The aggregate consolidated revenue from the sale of railcars and components in 2017 stands at RUB 55.4 billion or 89% of the total Holding’s consolidated revenue.

The revenue in the Lease division gained 17% to reach RUB 6.1 billion, despite the average fleet size shrinking over the reporting year under the program for modernization of the Company's own fleet. Such positive dynamics was propped up by increasing lease rates which growth was in line with the general market trend.

In 2017, as the railway shipping industry recovered and the demand for innovative railcars leapt up, the government reduced subsidies payable to purchasers of innovative rolling stock and subsidies to manufacturers were abolished completely. In the reporting year, UWC received a total of RUB 1.7 billion subsidies against RUB 3.2 billion in 2016. This reduction brought down the Holding's EBITDA by 7% to RUB 12.7 billion. However, the Company’s management believes that rich subsidy payments in 2016 were aimed specifically at helping the industry get through the recovery, with the government unlikely to increase such allowances in the future. Therefore, when analysing the dynamics of the EBITDA rate, subsidies factor can be reasonably deducted from the calculations. UWC’s EBITDA excluding subsidies in the reporting year grew by 14% to RUB 12.0 billion: an evidence of that the business is growing naturally.

The EBITDA rate in the Production division increased by 7% to RUB 9.7 billion, and excluding subsidies, the rate grew by 37% to RUB 8.0 billion. The Lease EBITDA totaled RUB 5.2 billion, growing by 22% compared to the previous year.

In the reporting period, the Holding incurred an aggregate loss of RUB 4.5 billion against RUB 569 million profit in the previous year. The smaller rate is mostly due to that the recognition of an income tax expense of RUB 875 million in 2017, while in 2016 the Company recognised a one off non monetary income tax benefit of RUB 1.7 billion. Moreover, while foreign exchange losses were recognised in 2017, in 2016 the Holding recognised foreign exchange gains and RUB 1.3 billion of profits from terminated operations of Vostok1520 (a one off effect).

The Holding’s capital expenditures were RUB 3.5 billion, a 27% fall compared to 2016. The largest investments were made to projects aiming to expand the product portfolio and raise operational efficiency at the facilities of TikhvinChemMash, TikhvinSpetsMash, and launch 27-tf railcars and bogies into production. The Company expects most investment projects to be completed in 2018, with the bulk of investments to become maintenance costs in 2019.

Alexey Tsyplakov, UWC’s Deputy CEO, Finance and Economy, said, ‘The dynamics of UWC’s key performance indicators is a reflection of that the railcar market and the demand for the company’s products have been both growing which generates positive sales results. Our last year’s performance figures also show that the company’s financial indicators can grow naturally.’