Kryukiv Railcar gets payment to modernize subway cars

Kryukiv Railcar (KVBZ UK) received a down payment and will shortly start modernizing the 95 E-series subway cars for the city of Kyiv, the company announced in a March 11 press release. The UAH 897 mln deal was inked in July 2012 and the project is expected to be completed by mid-2014.

Roman Dmytrenko: Kryukiv’s contract for the subway car modernization was initially announced in 2011 but has been repeatedly delayed due to lack of financing, despite the contract being signed in June 2012. Now with the uncertainty removed, we expect Kryukiv to generate 9% of our projected USD 655 mln in 2013 revenue from subway car modernization. Considering Kyiv has 180 E-series subway cars manufactured in 1960’s and 70’s, there is a chance this contract might be expanded. Nevertheless, this brings little cheer to the company’s investors as Kryukiv’s core segment – freight car production – continues to suffer a severe shortage of bogie castings, its key component. Kryukiv’s only supplier, Kremenchuk Steel Casting, postponed production on Feb. 13 after the Russian government suspended its quality certificate.