Russian Railways 2015 Annual Report

The Company aims to develop by improving internal...

The Company aims to develop by improving internal efficiency, strengthening its customer focus, working to lower costs in all areas and efficiently utilising available resources. In the current macroeconomic conditions, we managed to contain growth in transportation operation costs at 7.1%, a rate 55% lower than inflationary growth. Net profit totalled RUB 318 mln and labour productivity expanded 4.8%. We have offered new services for passengers: multimodal long-haul transportation, double-decker trains and daily express trains with a convenient schedule. This has resulted in passenger traffic increasing by as much as 50% on certain routes.

Reduced travel time significantly increases demand for transportation...

Reduced travel time significantly increases demand for transportation services: passenger turnover on rapid-transit routes grew 25% in 2015. The Programme for the Development of Rapid-Transit and High-Speed Traffic in Russia was adopted in 2015, providing an additional impetus for the development of the Russian railway industry. The Moscow-Kazan High-Speed Railway is being designed as part of a pilot project.

Operating amidst challenging macroeconomic conditions and a more than...

Operating amidst challenging macroeconomic conditions and a more than 3% slump in industrial production, the Company managed to contain the decline in handling volume to just 1% and maintain freight turnover at the 2014 level. Handling volume actually increased for a wide range of freight grew due to the flexible and effective use of the tariff corridor, boosting the Group’s income in the process. The share of profit from the sale of integrated transportation and logistics services also increased last year. Enhanced internal efficiency within the Production Unit and an optimal transportation management model were primary factors behind improved external customer focus indicators as well as growth of 13.5% in the average freight delivery speed to 371.5 km per day and a 1.1% increase in container train route speed to 896 km per day.

We implemented an investment programme valued at...

We implemented an investment programme valued at RUB 365 bln in 2015 with part of the programme financed by borrowed funds. In particular, the Company placed infrastructure bonds for the first time using money from the National Wealth Fund. The placement totalled RUB 60.2 bln and is for 25 years, which resulted in the average term of the credit portfolio increasing from nine years to ten years, while the share of short-term borrowings stood at only 7% at the end of the year. We were able to introduce special accounting for our hedging operations in 2015, which mitigated the negative effect of exchange rate differences in the Company’s financial results by RUB 70 bln. Operating profit from sales increased 43% last year compared with 2014.

Strategic priorities include ensuring the balanced development...

Strategic priorities include ensuring the balanced development of railway infrastructure in order to increase the volume of freight and passenger transportation, supporting traffic safety, introducing new transportation products and services, developing railway transit potential as well as improving the quality and effectiveness of investment in construction.

ON THE PATH TO CHANGE

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