Kryukiv Railcar freight car output falls 19% m/m in October

Freight railcar production at Ukraine’s leading railway machinery company, Kryukiv Railcar (KVBZ UK), fell 59% yoy to 2,166 units in 10M14, the company reported via the Interfax-Ukrayina news agency on Nov. 6. In October alone, the company produced 214 freight railcars, a 19% m/m decline yet an improvement from October 2013, when the company produced no freight railcars. In November, the plant is planning to work 10 days, compared to 15 days in October, 16 days in September and 20 days in August.

Alexander Paraschiy: The fourth quarter is typically the weakest for the company in terms of orders – for instance, it produced only 56 freight railcars in 4Q13. This year, demand for freight cars seems to be slightly better, but it still does not allow the company to work in normal mode. Clearly, this winter will be as tough for the company as the previous one, and Kryukiv will produce no more than 2,400 freight railcars in full year 2014 (-55% yoy).

As we stated before, the company’s future output growth depends solely on the ability of Ukrainian railway operators to order freight and passenger railcars and passenger trains. Thus far, there are some plans to restructure the monopoly railway operator, which potentially may recover demand for equipment in the sector. Although unfortunately, there are no detailed and reliable plans for that.