Russian Railways IFRS net profit down by 12% y/y in 2011.

By bne IntelliNews August 31, 2012
IFRS net profit of state-owned railways monopoly Russian Railways (RZD) declined by 12% y/y to RUB 183bn (USD 5.7mn) in 2011, the company announced. Revenues in 2011 went up to RUB 1.48tn. No other details were yet provided. In the meantime, it was also announced that RZD could place RUB 40bn-RUB 50bn worth of domestic bonds in fall 2012. Recently Fitch Ratings announced that 7% cargo rail transportation tariff indexation proposed by the government as of January 1 2013 will not be sufficient to finance the investment program of Russian Railways (RZD, BBB/Stable) in the absence of other financing sources or other support from the state as the only shareholder of the company. RZD itself proposed a 11% indexation. Fitch still expects subsidies and capital deposits from the state do support the operational activities and capital expenditures of RZD. The government also reviews additional way of support, such as state guarantees and investing reserves into long-term infrastructure projects. At the same time agency notes that partial privatization of the company (25% plus one share) planned for 2012-2013 is unlikely to affect the ratings of RZD. RZD in the coming 3-5 years plans to borrow RUB 60bn-RUB 80bn (USD 1.8bn - USD 2.4bn), PRIME reported citing a corporate finance rep of the company. This would include tapping the Eurobond market at least once a year, with the rest to be borrowed in RUB. To remind, RZD placed USD 1bn worth of 10-year Eurobonds yielding 5.7% annually in the end of March 2012. At the same time demand for the securities exceeded the amount proposed threefold. It is also noted that prior to the placement yield guidance was lowered from 5.875% to 5.75%, making it the lowest yield on 10-year Eurobonds from CIS issuers. Last month RZD placed 7-year RUB-denominated Eurobonds at 8.3%, demand almost twofold exceeding the amount proposed. This year the company is going to borrow about RUB 100bn, out of which 70% will account for RUB and 30% for foreign currencies.

Related Articles

Russias participation in Cyprus bail-out under question.

As Cyprus is trying to come up with new ways to raise EUR 5.8bn needed to secure the financing from ECB, EC, and IMF, Russia's participation in the package is not clear. According to the latest ... more

Fitch: Russian banks risks in Cyprus limited.

Fitch Ratings believes that resolution of the Cyprus crisis with a deposit levy or some other form of burden sharing involving creditors is unlikely to result in material losses for Russian ... more

Sources: Russia could triple oil exports to China.

Russia and China discuss contracts that would triple exports of Siberian oil through various transport corridors, Reuters reports citing unnamed sources in the industry. Rosneft is discussing ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 296