Luhanskteplovoz production up 2.2x yoy in February

Luhanskteplovoz (LTPL UK) boosted it production 2.2x yoy in February, delivering 16 diesel locomotive sections to Russian Railways (RZD), the company said in a March 18 press release. LTPL delivered 14 sections of its 2TE116U model locomotive and 2 sections of its new 2TE116UD model powered by General Electric, as compared to 14 and 8 units initially planned respectively. Luhanskteplovoz also announced it assembled it first triple-unit 3TE116U diesel locomotive last month. The company expects to deliver 14 2TE116U and 6 2TE116UD model locomotive sections to RZD in March.

Roman Dmytrenko: The company’s output growth is impressive, while we are slightly conserved about delays with its new 2TE116UD model, falling short of its January delivery plan by 50%. Though we are confident the company will meet its target of 176 2TE116U units for 2013, its 74-unit plan for the 2TE116UD model might not be achievable, putting its 2013 overall production target at risk. Nevertheless, we expect the company to demonstrate a 50% yoy production increase this year, which is still unlikely to boost its financial results due to transfer pricing.