Ukrainian Railways generates UAH 12 bln losses in 2020

State railway operator Ukrainian Railways (RAILUA) decreased
net revenue 17% yoy to UAH 75.3 bln in 2020, according to its audited report
released on April 9. The company’s revenue freight transportation segment
decreased 10% yoy to UAH 65.0 bln and its passenger segment by 58% yoy to UAH
4.1 bln. Due to cost cutting measures, operating losses in the passenger
segment remained flat yoy at UAH 12.9 bln, but operating profit in the freight
segment decreased 86% yoy to UAH 1.2 bln. Therefore, the company’s EBITDA fell
42% yoy to UAH 10.0 bln and its bottom line turned to negative UAH 11.9 bln
from UAH 3.0 bln positive a year ago.

The company’s operating cash flow before working
capital changes decreased largely in line with EBITDA, by 43% yoy to UAH 10.5
bln, in 2020. Its cash from operations decreased by 31% yoy to UAH 10.4 bln and
purchase of PP&E remained flat yoy at UAH 9.2 bln. The company managed to
repay net UAH 4.5 bln of debt in 2020, which made its cash balance fall 64% yoy
to UAH 2.5 bln as of end-2020. Meanwhile, its total debt increased 6% yoy (solely
due to the appreciation of foreign currency debt) and net debt increased 26%
yoy to UAH 32.2 bln. As a result, its net debt to EBITDA reached 3.2x as of
end-2020, from 1.5x a year ago.

Recall, last week, Ukrainian Railways revealed its financial
plan for 2021 with revenue of UAH 72.1 bln (up 15% yoy) and EBITDA of UAH 19.3
bln (up 92% yoy), as well as a plan to nearly triple CapEx to UAH 27.0 bln.

Alexander Paraschiy: The company’s audited result for 2020 looks slightly better than presented
in its financial plan for 2021, but in general the numbers are very close to
those in the plan. Now that the company has revealed its financials with Net
debt to EBITDA ratio exceeding 3.0x, it is limited to taking new loans. This,
in turn, limits its flexibility and puts under question its ability to finance
an ambitious CapEx plan for this year. The latter looks good for the company’s
liquidity, but increases risks for its mid-term instability.