Kryukiv Railcar supplies two intercity trains to UZ, may sell more in 2015

Ukrainian railway monopoly Ukrzaliznytsia (UZ, RAILUA) received two passenger intercity trains from Kryukiv Railcar (KVBZ UK), Ukraine’s leading railway machinery producer. The total value of the two trains is UAH 400 mln. UZ is also considering an order of up to 15 passenger suburban trains in 2015, Interfax reported on June 24, citing a UZ press release.

Alexander Paraschiy: It’s encouraging that Kryukiv Railcar gained an opportunity to refocus its operations from the production of freight railcars to passenger trains. The sale of two trains will help the company to improve its 2014 cash flow and revenue, while it will not add any workforce (the trains were assembled in 2012-13). Moreover, the revenue generated from the deal will not offset declining sales due to a slump in orders for Kryukiv’s main product, freight railcars. In 5M14, such production plunged by 2,300 units yoy, which generated UAH 1.7 bln less revenue for the company.

With no new orders from Ukrzaliznytsia, Kryukiv Railcar’s revenue is likely to be more than halved in 2014. Since demand for Ukrainian railcars by Russia is unlikely to be renewed, Kryukiv will be heavily dependent on orders from UZ in the future. At the moment, the chances of UZ’s possible 2015 order don’t look certain, given the poor history of the state monopoly’s long-term purchase plans being fulfilled.