Analysis of financial results (RAS)

Vadim Mikhailov
Looking back at the 2019 performance, I am happy to say that the Company was able to deliver on key operational and financial targets, even amid considerable external pressure. This was made possible through our systematic efforts to increase the internal efficiency, including cost management to offer discounts to shippers, pricing under long-term contracts with suppliers and effective engagement with investors in capital markets. The Company’s RAS income rose by 2.8% y-o-y to RUB 1,848 bn. Our RAS EBITDA increased by 9.7% to RUB 417 bn."
Vadim Mikhailov First Deputy CEO of Russian Railways

Russian Railways’ performance in 2019

While Russia’s GDP grew by 1.3% (2018: 2.5%) and industrial production rose by 2.3% (2018: 3.5%) in 2019, freight handling declined by 0.9% in the reporting year. Yet, Freight Turnover total remained unchanged from the previous year.

At the same time, passenger transportation continued a steady growth (up 3.1% vs 2018) across all segments, despite the effect of a high base on the back of the 2018 FIFA World Cup in Russia.

In 2019, the Company focused on ensuring a balanced operating performance and cost management. Income from transportation operations added 3.6% y-o-y. Freight transportation yielded 3.4% more income compared to 2018.

Amid changes in the freight transportation structure, the revenue rate growth stood at 3.4%. Income from passenger transportation increased by 11.9% y-o-y.

As a result of implemented performance improvement initiatives, transportation costs were up by only 1.9% y-o-y as consumer prices grew by 4.5% and producer prices rose by an average of 2.9% per annum.

Income from other operations amounted to RUB 22.9 bn. As a result, sales profit for the year increased by 18.1% and amounted to RUB 166.3 bn.

Dividends from subsidiaries and affiliates stood at a record high of RUB 28.7 bn, while sales of their shares amounted to RUB 11.8 bn yielding RUB 0.8 bnDue to a complicated structure of the sale of TransContainer, the effect of the disposal of the controlling stake will be reflected in Russian Railways’s RAS financial statements in 2020 after the receipt of dividend from UTLC..

Outstanding loan debt at the end of 2019 stood at RUB 1,477.5 bn. The Company continued to optimise its debt portfolio and reduce debt servicing costs, including a number of successful placements and refinancing exercises, which helped bring the interest rate to 5.89% as at the end of 2019.

As a result of the Company’s push to improve operational efficiency and financial policy, net profit increased to RUB 53.5 bn compared to RUB 18.4 bn in 2018 (target – RUB 27 bn).

In 2019, EBITDA went up by 9.7% y-o-y to RUB 417.2 bn (2018: RUB 380.2 bn).

Russian Railways continued implementing its large-scale investment programme. In 2019, capex on expanding and upgrading fixed assets exceeded RUB 674 bn, hitting new record highs.

Russian Railways’ performance in 2019 (under RAS)
1,278.1 mt
–0.9% y-o-y –11.5 mt y-o-y
Income from transportation operations
1,641.9 RUB bn
+3.6% y-o-y RUB+ 56.8 bn y-o-y
417.2 RUB bn
+9.7% y-o-y RUB+ 37 bn y-o-y
Freight turnover total
3,305.0 bn tkm
flat y-o-y
435.3 kopecks / 10 virtual tkm
+1.9% y-o-y
Net profit (RAS)
53.5 RUB bn
up 2.9x y-o-y RUB+ 35.1 bn y-o-y
Passenger turnover
133.4 bn pkm
+3.1% y-o-y +4 bn pkm y-o-y
Growth in productivity for transportation operations
674.1 RUB bn
up 1.3x y-o-y
Revenue rate
454.9 kopecks / 10 tkm
+3.4% y-o-y +14.8 kopecks / 10 tkm y-o-y
Weighted average borrowing rate
–20 pp y-o-y
Tax and insurance contributions paid
318.3 RUB bn
–0.2% y-o-y –RUB 0.8 bn y-o-y
Income from transportation operations

In 2019, income from transportation operations increased by 3.6% y-o-y to RUB 1,641.9 bn.

Income from freight transportation

In 2019, income from freight transportation reached RUB 1,503.4 bn, up 3.4% y-o-y (+RUB 48.8 bn).

In the context of the formation of the volume of traffic (cargo turnover) at the level of last year, the increase in revenue from cargo transportation was formed due to the growth of the revenue rate per ton-kilometer.

In 2019, income from freight transportation reached
1,503.4 RUB bn
+3.4% y-o-y

In General, at the end of 2019, the revenue rate was RUB 4.55 per 10 tkm with an increase of +3.4% compared to the previous year, which almost corresponds to the level of indexation of tariffs for cargo transportation +3.5% (established by FAS order No. 1482/18 of October 30, 2018). At the same time, in 2019, there were a number of negative changes in the structure of transportation that affected the decline in revenue, such as an increase in the share of low-income cargo (coal) transportation, and an increase in the share of export traffic to ports with a long range of transportation.

Income from long-haul passenger transportation

Russian Railways carries out long-haul passenger transportation in the high-speed segment (Sapsan, Lastochka and Allegro). In 2019, income from transportation operations totalled RUB 21.7 bn, up by RUB 1.9 bn (+9.7%) y-o-y. The increase is attributable to the rise in demand for Sapsan train trips and passenger transportation by additionally introduced Lastochka trains.

Income from suburban passenger transportation

In 2019, income from transportation services provided by Russian Railways within the Moscow Central Circle amounted to RUB 6.2 bn, up by RUB 1.1 bn (+20.6%) due to a transition to a four-minute interval service from 21 November 2019 and an increase in transportation operations.

Income from infrastructure services

In 2019, income from infrastructure services for freight and passenger transportation totalled RUB 110.6 bn, up 4.7% (RUB 4.9 bn) y-o-y.

Transportation expenses

In 2019, transportation expenses amounted to RUB 1,498.5 bn, up 2.0% y-o-y.

Transportation expenses, RUBs bn
Indicator 2018 (actual) 2019 Change y-o-y 2019 (actual) vs 2019 (plan)
Plan Actual +/– % +/– %
Transportation expenses 1,469.5 1,515.1 1,498.5 +29.0 +2.0 –16.6 –1.1
Payroll expenses 439.9 454.6 453.5 +13.7 +3.1 –1.1 –0.2
Social expenses 124.9 129.4 129.2 +4.3 +3.5 –0.2 –0.1
Material expenses 537.3 555.3 544.4 +7.2 +1.3 –10.9 –2.0
Materials 63.4 51.5 52.8 –10.6 –16.8 +1.3 +2.5
Fuel 110.7 117.5 113.1 +2.4 +2.2 –4.4 –3.7
including for train traction 97.2 101.5 99.2 +2.0 +2.1 –2.3 –2.2
Electricity 166.7 178.9 175.6 +8.9 +5.3 –3.3 –1.9
including for train traction 148.0 159.2 156.7 +8.6 +5.8 –2.6 –1.6
Other 196.5 207.4 203.0 +6.5 +3.3 –4.5 –2.1
Depreciation 230.3 241.4 240.1 +9.8 +4.3 –1.3 –0.5
Other expenses 137.2 134.3 131.2 –6.0 –4.4 –3.2 –2.4
Cost optimisation

Russian Railways remains committed to enhancing its internal efficiency.

In 2019, the Company implemented RUB 30.5 bn worth of initiatives to improve operational efficiency and optimise costs.

Key effects of Russian Railways’ efficiency improvement initiatives in 2019


Assessment and optimisation of operating expenses
3.8 RUB bn
  • Higher energy savings and energy efficiency
  • Optimisation of expenses related to third-party work and services
  • Lower expenses due to re-use of materials
  • Higher efficiency of track facilities maintenance


Higher efficiency of the procurement and supply chain management system
3.6 RUB bn
  • Lower prices resulting from tender procedures for services procured


Introduction of cutting-edge technologies and innovations
1.3 RUB bn
  • Lean production and other projects


Higher asset management efficiency
7.7RUB bn
  • Optimisation of the traction rolling stock through its better utilisation
  • Modification of track repair schedules
  • Higher efficiency of property, plant and equipment maintenance and repair management


Improvements in labour productivity
9.4 RUB bn
  • Set of technical and organisational measures


Other initiatives
4.7 RUB bn
  • Tax benefits
  • Optimisation of travel and other expenses
Total 30.5 RUB bn
Income from other operations

In 2019, the Company’s income from other operations decreased by 3.3% y-o-y to RUB 206.2 bn.

Breakdown of income from other operations, RUB bn
Other income and expenses

In 2019, the financial result from other income and expenses amounted to – RUB 68.0 bn, with a positive effect up by RUB 15.9 bn y-o-y.

This was largely due to the positive revaluation of FX-denominated debt with the use of FX revenue hedging tools and the appreciation of the rouble against major currencies coupled with improvements in the performance and investment appeal of Russian Railways’ subsidiaries and affiliates evidenced by the 1.5 times y-o-y growth of dividend payments.

These achievements helped partially offset the negative impact of bigger interest paid associated with the growth of the FX-denominated debt portfolio in 2019.

Profitability analysis


In 2019, ROE (return on equity) totalled 1.19%.

Sales profitability, operational efficiency, and EBITDA margin (under RAS)

In 2019, sales profitability stood at 9.0%, up 1.2 pp y-o-y, while EBITDA margin (under RAS) amounted to 22.6%, up 1.5 pp y-o-y.

This strong performance was secured by a 18.1% y-o-y increase in sales revenue, including through more efficient cost management (in 2019, transportation costs increased by 1.9% as consumer prices grew by 4.5% and producer prices rose by 2.9%), and a 3.4% growth of revenue rate amid changes in the freight turnover structure.

ROE (net income / equity), %
Sales profitability, %
Revenue rate, kopecks / 10 tkm
Transportation costs, kopecks / 10 virtual tkm
EBITDA margin (under RAS), %
EBITDA (under RAS), RUB bn

Operating profitability (net profit margin)

Our continued effort to improve operational efficiency and positive effects of the financial policy (debt portfolio cost optimisation), as well as the appreciation of the rouble resulted in a 1.9 pp increase in net profit margin (operating profitability).

Operating profitability (net profit margin), %
Government support of Russian Railways in 2019

In 2019, Russian Railways received RUB 121.8 bn from the government budget and the National Wealth Fund, including RUB 96.6 bn from the federal budget (of which RUB 40.2 bn was allocated from the budget of Moscow via inter-budget transfers), RUB 19.5 bn from the National Wealth Fund, and RUB 5.7 bn from regional budgets and extra-budgetary funds.

Taxes and insurance fees

The total amount of taxes and insurance fees accrued in accounting statements for 2019 stood at RUB 324 bn, or up 102% y-o-y, including:

  • RUB 34.4 bn (or up 87.4% y-o-y) owed to the federal budget;
  • RUB 135.2 bn (or up 102.7% y-o-y) to the regional and local budgets;
  • RUB 154.4 bn (or up 105.3% y-o-y) owed to the extra-budgetary funds.

In 2019, to pay current taxes and insurance premiums (including offsets and refunds) RUB 318.3 bn was allocated, including:

  • to the Federal budget – RUB 39.9 bn;
  • to the budgets of the subjects of the Russian Federation and municipalities – RUB 135.2 bn;
  • to non-budgetary funds – RUB 143.2 bn.