Ukrzaliznytsia 2017 plan approved assuming 23% freight rate hike
14 September 2017
Ukraine’s Cabinet of Ministers approved on Sept. 13 the
business plan of railway monopoly Ukrzaliznytsia (RAILUA) for the year 2017,
its website reported. The plan assumes that the company will boost its revenue
13% yoy to UAH 76.1 bln, while reduce its EBITDA 9% yoy to UAH 18.3 bln.
The key driver of revenue growth is projected to be
freight transportation, which would result from 1.4% yoy higher volume of goods
shipped and higher freight rates. In particular, the plan assumes a freight
rate hike of 22.5% as of October 1, which will add UAH 2.9 bln to company
revenue this year.
The plan also assumes a 2.3x yoy increase in capital
investments by Ukrzaliznytisa to UAH 16.0 bln in 2017.
Alexander Paraschiy: So far,
there is no information that the government has approved a resolution on a
freight rate hike, but it has two more weeks to do so and publish the
resolution on Oct. 1. Moreover, the Cabinet’s approval of the business plan –
which assumes the rate hike – leads us to expect it will be approved on time.
Taking the rate hike as our base-case scenario, we maintain our neutral view on
RAILUA Eurobonds.
already outdated. In particular, it does not look realistic that Ukrzaliznytsia
will be able to allocate UAH 16 bln in capital expenditures this year. According
to the company press release, it spent just UAH 5 bln on capital investments in
8M17, so it is unlikely to spend the leftover UAH 9 bln in the remaining four
months.
