Ukrainian Railways revenue improves 4%, EBITDA jumps 48% in 1H21

Ukrainian Railways (RAILUA) increased net revenue 3.9%
yoy to UAH 37.02 bln in 1H21, according to the company’s management report
published by marlin.org.ua news site on Sept. 13. Its revenue from freight and
passenger transportation increased 1.8% and 26.7% yoy, respectively. The
company’s 1H21 EBITDA reached UAH 4.46 bln, which is 48.0% more yoy. Its net
loss decreased to UAH 1.41 bln in 1H21, from UAH 8.79 bln a year ago. As
compared to the company’s financial plan for 1H21, its revenue under-performed
by 5.2%, EBITDA was lower by 36% and net loss was in line.

Ukrainian Railways generated UAH 3.62 bln of cash flow
from operations in 1H21 (vs UAH 0.09 bln cash outflow a year ago). The company
raised net UAH 0.19 bln from new loans in 1H21 (vs. UAH 2.31 bln net repayment
a year ago) while its plan assumed a net raising of UAH 9.94 bln. Its capital
expenditures increased 83% yoy to UAH 4.52 bln, but were 56% lower than
initially planned.

Its end-June debt was UAH 39.08 bln (down 1.7% yoy)
and net debt was UAH 37.27 bln (up 2.9% yoy). This implies its net debt to
EBITDA ratio was 3.2x as of end-June, which is a slight decline from what the
company reported for end-2020 (3.4x).

Alexander Paraschiy: The leaked results imply that the situation is gradually improving in
Ukrainian Railways (its  revenue increased 21% yoy and its bottom line
turned positive in 2Q21). The company is apparently recovering from the crisis,
which makes the creation of a high profile “anti-crisis staff” for the company questionable. The recovery pace is
slower than initially planned, meaning its full-year result will be below the plan approved in March. We estimate the company will be able to increase
net revenue by 7% yoy to UAH 81 bln and EBITDA by about 35% yoy to UAH 13.7 bln
in 2021, which will allow it to improve leverage multipliers. All in all, we
remain neutral on RAILUA bonds.