UWC’s Operational Results for 4Q 2018

PJSC “Research and production corporation “United Wagon Company” (UWC, the Holding or the Company) (MOEX: UWGN), the leading builder of railcars in Russia, reports its 4Q 2018 operational results.

In 4Q 2018, the production output reached 5.7 thousand railcars, being 5% higher than over the same period in 2017. As the 12-month production totalled 19.7 thousand railcars, growing by 3%, the production targets set for 2018 have been met. In 2019, UWC intends to maintain its annual production at a level of 19 to 20 thousand railcars.

Increasing production volumes of specialised rolling stock was the key driver for growth throughout the reporting quarter and the entire year. In 4Q, the production of hopper cars leapt 90% year-over-year to 1.6 thousand units, while the increase over the year was 108% to 5 thousand units. The production of other types of specialized railcars (flat and box cars, etc.) grew by 43% to 762 units in 4Q, and over the 12 months, by 98% to 2.6 thousand units. The tank car production went up by 50% to 308 units in 4Q and by 34% to 999 units over the year. Meanwhile, following the market’s gradual switching to specialised rolling stock, gondola production decreased by 21% to 3 thousand units in 4Q and by 24% to 11.1 thousand units over the year. In 2019, the Company targets to continue increasing the share of specialized freight cars in its output.

In 4Q, UWC certified its woodchip gondola car with a volume of 211 m³ and loading capacity of 70 t. A total of six certificates were granted in 2018, expanding the certificated models portfolio to 57 units.

19.5 thousand railcars were dispatched to third parties over the year which represents 97% of the number of new railcars sold in 2018. The largest supplies were made to GTLK (gondola, hopper, box and flat cars), Rusagrotrans (hopper cars), Uralkali (hopper cars), Logistics1520 (hopper cars), Kronospan (timber flat cars) and NPO Azot (tank cars). These companies acquired a total of 15.4 thousand railcars from the Holding. The Company also supplied its railcars to Akron (hopper cars), MKB-Leasing for subsequent far abroad exports (gondola cars), Fintrans GL (box cars), etc. A total of more than 50 customers purchased the Company’s railcars.

In 4Q, UWC’s leasing companies acquired 353 new railcars, including 337 gondola cars and 16 flat cars. Since the start of the year, the leasing subsidiary was delivered 659 railcars in total.

In the reporting quarter, the Company sold 503 standard oil tank cars from its own fleet. A total of 2.2 thousand railcars were sold from the fleet throughout 2018. Over the year, the Company has disposed of all old generation gondola cars mounted on 23.5 tf bogies. In line with the leaseback transaction entered into 2H 2018, UWC sold 11.1 thousand railcars from its fleet to Gazprombank Leasing.

As a result of the above changes, UWC’s own fleet and fleet under financial lease amounted to 11.9 thousand railcars, a 10% decrease compared with the 2017 end.

At the year’s end, UNICON 1520 managed a fleet comprised of 1.1 tank containers (+72% compared to 31/12/2017, with their number remaining unchanged compared to the preceding quarter), 585 flat cars (+126% compared to 31/12/2017, and +5% compared to 30/09/2018) and 78 tank cars for chemicals (+105% compared to 31/12/17, with their number remaining unchanged compared to the preceding quarter). Shipments over the quarter totalled 99.9 thousand tons, an increase of 118% over the figures of 4Q 2017 and 9% up compared to the previous quarter. The company shipped a total of 305.1 thousand tons of chemicals over the year.

In 4Q, three railcar repair shops were assigned Category I to provide all kinds of maintenance and repairs to new generation railcars. Consequently, the number of Category I service centres reached 17, while the entire UWC’s service network comprised of 72 depots.