Kryukiv freight railcar output drops 34% yoy in 8M13

Kryukiv Railcar (KVBZ UK) manufactured 509 freight railcars in August (-48% yoy, -16% m/m), Interfax reported on September 10. Total freight railcar output fell 34% yoy to 4,982 units in 8M13. Passenger railcar production rose 20% yoy to 59 units in 8M13. Last week, Kryukiv announced plans to cut staff and shift to a three-day work week shortly after revising its 2013 production target to 6,000 freight cars (a 45% yoy decrease).

Roman Dmytrenko: The company’s production reached its lowest monthly rate since November 2011, with very little chance to rebound in the near term as CIS demand for freight railcars remains weak. However, Kryukiv Railcar remains the best positioned among Ukrainian rail machinery producers to post only a moderate decrease in revenue (as opposed to big declines expected) because it’s exposed to the passenger railcar segment. The sale of one ordinary passenger railcar generates about the same revenue as 20 standard freight gondola cars. We estimate Kryukiv will report a 22% yoy revenue decline to USD 655 mln and a 35% yoy drop in EBITDA to USD 82 mln for 2013.