Stakhanov Railcar 2012 output down 26% yoy, no growth expected in 2013

Stakhanov Railcar (SVGZ UK) cut its freight car production 26% yoy to 5,060 units in 2012, Interfax reported on Feb. 4. Total revenue dropped 14% yoy to UAH 3.0 bln in the year. In 2013, the company plans to keep output “at least on the level of 2012.”

Roman Dmytrenko: The company’s production volume and revenue for FY2012 missed our full-year targets by 8% and 6% respectively (see our news on Nov. 23). The production data implies Stakhanov manufactured 241 cars per month in November-December, which is almost 2x less compared to the average data for 10M12 (458 units). Moreover, this amount is almost 2x less than the maximum production capacity of its exclusive bogie casting supplier, the Czech Kutna Hora. This indicates the drop in output is no longer related to the shortage of bogie casting supplies but to fading demand for gondola cars. What’s even more disappointing, Stakhanov did not take advantage of an effective ban on railcar exports to Russia slapped on its main competitors – Kryukiv Wagon (KVBZ UK) and Dniprovahonmash (DNVM UK) – whose only casting parts supplier lost its Russian quality certificate. We expect Stakhanov will report losses for 2012 for the first time since 2009. Moreover, given the recent developments, we see that the non-declining output in 2013 would be a challenging task for Stakhanov.