Ukrzaliznytsia underperformed by 30% in August

Обзоры по компаниям и отраслям 11.09.2014 Ukraine’s railway monopoly Ukrzaliznytsia (RAILUA) suffered from a plunge in freight turnover, which resulted in its “underreceiving” UAH 1.5 bln, or 30% of its revenue in August, the company’s press-service reported on Sept. 10, citing its acting head. In its other release that day, the monopoly reported its top management was able to decrease its procurement costs by UAH 1 bln since April 2014 and is going to save another UAH 1 bln by the year end. Its combined net revenue was UAH 51 bln and combined EBITDA was UAH 11 bln in 2013. Alexander Paraschiy: While it’s not very clear what was the comparison base for Ukrzaliznytsia’s “underperformance” in August, the numbers behind the decline look really worrying. Revenue fell almost double our UAH 0.8 bln estimate for Ukrzaliznytsia’s August revenue decline, revealing the risks to revenue and profit the monopoly may face in case the warfare in Donbas does not de-escalate soon. The new management’s fight against corruption in Ukrzaliznytsia’s procurement system is a good start, but we have yet to see the results of such efforts: in 1H14, the aggregate EBITDA of the six companies of Ukrzaliznytsia decreased UAH 531 mln yoy, faster the their revenue fell (by UAH 469 mln yoy).