Cabinet approves Ukrainian Railway strategy till 2023

Ukraine’s Cabinet of Ministers approved on June 12 the
strategic plan of Ukrainian Railway (RAILUA) for 2019-2023, the company’s CEO
Yevhen Kravstov reported the same day. Among its key strategic goals are the
satisfying customer demands, securing financial stability, modernizing and
drawing investments, as well as improving safety, competitiveness and the
quality of corporate governance. To fulfill its strategy, the company plans to
set efficient rates, conduct reorganization, approve a long-term investment
program and fight corruption. The presentation contains no numbers, with the
company stating it’s still developing the details.

Alexander Paraschiy: The company
drafted its strategy during the last two years, and it’s a great achievement
that the Cabinet finally approved it. At least, it should mean the government
is ready to help the company to set railway rates based on justified levels, or
on  existing market rates.

In its 2019 business plan, also approved by the
government, the company presented some forward-looking numbers that might be a
part of its strategy till 2023. These numbers foresee the company’s EBITDA
rising to UAH 25.0 bln by 2023 (from UAH 16.3 bln in 2018), as well as capital
investments of UAH 78.5 bln for 2019-2023, which looks underestimated. We
expect the company will provide more information on its financial outlook and
needed investments in the coming months. So far, we are keeping our neutral
view on RAILUA Eurobonds.