28 October 2014
The six regional railway monopolies of Ukraine, all subsidiaries of Ukrzaliznytsia (RAILUA), reported their individual financials for 9M14 in October 24-27. Their combined revenue decreased 3% yoy to UAH 35.5 bln in 9M14, with the biggest decliners being Donetska Railway (operates in the war-afflicted Donetsk and Luhansk regions) and Prydniprovska Railway (operates in the Dnipropetrovsk, Zaporizhia and Crimea regions), both of which had a 14% yoy revenue drop. The six subsidiaries’ combined EBITDA for the nine months totaled UAH 6.1 bln, representing only a 6% yoy decline, with the biggest decliner expectedly being the Donetska Railway (down 36% yoy to UAH 0.76 bln).
Alexander Paraschiy: As we found out earlier, the combined financial statistics of the six local railways is a very good approximation of Ukrzaliznytsia’s (RAILUA) financials. For instance, the six entities’ combined revenue was just 1.9% higher than UZ’s reported official result for 2013 (and it was 1.4% higher in 2012). The aggregate EBITDA of the six subsidiaries was 1.4% less than UZ’s official result for both 2012 and 2013.
The 9M14 results implied a pretty solid financial performance of the railway companies in 3Q14, with combined revenue falling 5% yoy to UAH 12.15 bln and combined EBITDA improving 6% yoy to UAH 1.98 bln. Again, expectedly weak was the result of Donetska Railway, whose revenue fell 36% yoy (to UAH 1.43 bln) and EBITDA dwindled 69% yoy to UAH 0.12 bln.
Therefore, the combined 3Q14 financial results look encouraging for Ukrzaliznytsia, as it demonstrates that the Donbas factor did not harm the P&L of the railway monopoly much. This suggests that our full-year 2014 EBITDA estimate for the monopoly at UAH 9.2 bln (-16% yoy) is likely to be significantly outperformed