UWC’s Operational Results for 2Q 2017

PJSC “Research and production corporation “United Wagon Company” (“UWC” or the Holding) (MOEX: UWGN), the leader in innovative railcar building in the 1520 mm track gauge zone, announces its operational results for 2Q 2017.

In 2Q 2017, the production output was 4.6 thousand railcars, 22% higher than for the same period last year. Railcar production in 1H grew by 35% to 9.2 thousand units. The positive dynamics has been secured by the continuously growing demand for UWC’s railcars and increasing cargo base, along with certain advantages of such railcars over those made by other manufacturers.

In the reporting period, UWC diversified further its product line. The share of tank cars in the 1H production pattern was raised to 5% as the production capacity increased and «TikhvinChemMash» received more orders. The share of other rolling stock, which included flat cars and box cars, reached 4% following increases in the production capacity of «TikhvinSpetsMash» and the demand for specialized new generation railcars.

UWC expanded its product line to include a total of 45 railcar models and modifications. In the reporting quarter, the Holding successfully certified 2 new railcar models with an axle load of 27 tf: gondola with discharge hatches, a body volume of 108 m3, and solid-bottom gondola, a body volume of 100 m3.

Over 6 months of 2017, 65% of railcars were sold under direct contracts to third parties. The largest buyer was State Transportation Leasing Company (GTLK) that acquired a total of 4 thousand railcars made in 2017, whereof 2.1 thousand were delivered to it in 2Q. The total number of railcars supplied to GTLK is 8.9 thousand. Further, in 2Q the Holding contracted with Sberbank Leasing to supply 100 grain hopper cars, and with Locotrans to supply 40 box cars, and delivered ammonia tank cars to UralChem and tank cars for caustic soda other chemicals to Khimprom LLC and PJSC Khimprom.

35% of railcars were sold to RAIL1520, UWC’s leasing subsidiary. The company purchased these railcars to substitute 4.9 thousand standard gondola cars sold from its own fleet to Federal Freight in 1H. Due to the sale of the standard rolling stock, the share of new generation railcars in UWC’s fleet for lease grew to 82%. As at the end of the reporting period, the size of UWC’s own fleet was 14.3 thousand railcars.

In 2Q, UWC inaugurated 3 service centres offering maintenance services for new generation railcars, two of which located in the Baltic states (authorized to perform current uncoupling repairs) and one in the Kursk region at Zheleznogorsk Car Repair Plant (authorized to perform all types of maintenance and repairs, including scheduled maintenance). Therefore, as at the end of the reporting period, the Holding’s service centre network comprises 63 service centres including 3 centres authorized to perform scheduled maintenance.