Moody's upgrades Russian Railways outlook to Stable.

By bne IntelliNews January 21, 2010
Moody's Investors Service confirmed Baa1 rating of state-run railroad monopoly Russian Railways (RZD), while upgrading its outlook to Stable from Negative. Agency attributed the upgrade of the outlook to its increased confidence that government support program is compensating for the consequences of the crisis on the railroad industry. Moody's also notes company's successful and timely adjustment to the new market conditions, namely cutting its investment program by 30% to RUB 176bn and cost-cutting measures enabling RZD to save extra RUB 188bn. Company posted net profit of RUB 35.14bn in Jan-Sep 2009, down by 10% y/y. To remind, in H1/09 company suffered a net loss of RUB 13.7bn vs. RAS net profit of RUB 27.3bn in H1/08. In Jan-Sep RZD revenues went down by 7.2% to RUB 778bn. To remind, as announced by PM Vladimir Putin in summer 2009, state support for RZD is going to amount to RUB 50bn in 2010, the same as in 2009. As then commented by the source from RZD, RUB 50bn is a minimum subsidy sufficient for covering companys losses on the transportation tariffs. In 2009 year RZD planned to increase the tariffs by 14.5%, while the actual increase was 8% and next year indexed tariffs will not exceed 9.4%. RAS net profit of RZD in 2008 amounted to RUB 13.4bn vs. net profit of RUB 84.5bn in 2007. Russian Railways is 100% owned by the government.

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