UWC announces operating results for 4Q and 12M 2016

PJSC “Research and production corporation “United Wagon Company” (UWC or the Holding) (MOEX: UWGN), the leader in innovative railcar building in the 1520 mm track gauge zone, announces the results of its operations for the fourth quarter and twelve months of 2016.

The Holding’s entities produced 5.0 thousand railcars in 4Q, resulting in total 2016 production of 15.9 vehicles. The production for both periods represented an increase of 28% from 2015. UWC has successfully met its 2016 production goal.

The Holding sets its production target at 18-20 thousand railcars in 2017. The higher production goal will be reached through raising the capacity utilization rates of “Tikhvin Freight Car Building Plant” (TVSZ) and “TikhvinСhemMash”, as well as expanding the production capacity of “TikhvinSpetsMash”. The demand for the whole production volume has been confirmed.

The Holding diversified further its product line in the reporting year. The share of hoppers in the production pattern grew from 4% to 14% owing to large supplies of grain hoppers to United Grain Company and mineral hoppers to Uralkali. The share of chemical tank cars reached 3% as the production capacity of “TikhvinСhemMash” and it utilisation grew after the plant’s launch in December 2015.

Over the year UWC’s product line expanded to a total of 40 railcar models and modifications, with the company reaching its certification targets. The models certified in 4Q included gondola with hatches (1-ВМ dimension, body volume of 92 m³ and 27 tf axle load), box car (body volume of 175 m³), tank cars for methanol (Tpr dimension), petroleum, molten sulfur and chemicals with a corrosion-resistant steel body.

In 2016, 70% of newly produced railcars were sold directly to third parties. The largest customers included: Railway operator VM Trans, leasing company BUSINESS ALLIANCE, United Grain Company, Uralkali and Metafrax. In 4Q the first batch of timber flat cars manufactured by “TikhvinSpetsMash” was delivered to Lokotrans, the total supply volume to be 250 units. Further, the Holding entered into supply contracts for chemical tank cars with “Bashkir Soda Company” and Fintrans GL (Ilim Group). 30% of railcars were sold to “TH “UWC” LLC increasing UWC’s own fleet to 20.8 thousand railcars at the end of the year. The said railcars were accumulated over the second half of 2016 to be sold under the existing contracts in 2017.

In the reporting quarter UWC launched 3 new service centres operating at railcar repair shops of our customers: Uralkali, URALCHEM and Metafrax. As at the year end, UWC’s service network included 58 centres. Railcars manufactured by UWC proved highly reliable in 2016. As shown by UWC‘s statistics over the 12-month period, the number of current uncoupling repairs for TVZS’s new-generation gondolas was 10 times below the network average.