IBI-Rating has upgraded the credit ratings of «Ukrzaliznytsia» JSC

IBI-Rating informs on upgrading of the long-term credit rating of «Ukrzaliznytsia» JSC from uaBBВ to uaBBВ+ grade with changing the rating outlook from «evolving» to «stable».

The upgrading of credit rating is due to increased financial results and operational efficiency, as well as improved liquidity.

According to the consolidated financial statements, compiled under IFRS, net income of «Ukrzaliznytsia» JSC according to the results by 9 months of 2019 amounted to UAH 67,530.1 million, which is by 10.2% more, as compared to the same period of the previous year. All the main components of net income have grown. The profit from operating activities amounted to UAH 7,866.1 million, which in 3.4 times higher than the result by 9 months of 2018 year. Net profit amounted to UAH 3,913.1 million, while for the same period of the previous year - UAH 0.2 million. The volume of highly liquid assets of «Ukrzaliznytsia» JSC increased to UAH 10,193.5 million as of September 30, 2019, which covered 38% of operating liabilities.

The level of debt load of «Ukrzaliznytsia» JSC is assessed as acceptable, with some bank loans continuing the restructuring process, which is a limiting factor for the credit rating grade. The sensitivity of currency risk is partially reduced by the presence of currency revenues from transit traffic and the launch of quasi-hedged instruments.

«Ukrzaliznytsia» JSC is formed on the basis of the State Administration of Railway Transport, enterprises and institutions of public railway transport, which are reorganized by merger. «Ukrzaliznytsia» JSC is a natural monopolist on rail transport in the territory of Ukraine, which provides a stable cash flow from operating activities. At the same time, the Company depends on state regulation, first of all, setting tariffs for transportation. There is a need for significant investments in the renovation of rolling stock of «Ukrzaliznytsia» JSC, due to high wear and tear.

Materials used for conducting the analytical research were obtained from «Ukrzaliznytsia» JSC, including: financial statements for 2016-2018 and 9 months by 2019, reference information on the activities of «Ukrzaliznytsia» JSC, information on issues of interest-bearing bonds, other necessary internal information, as well as information from open sources, which the Rating Agency considers to be reliable.

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