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Operating Performance
Share of provinces in 2022
Evgeny
Pakhomov
Deputy Director of Account Settlement Control and Production Analysis Department, Commercial Directorate
Mean Speed and Train Marshalling
in 2020 to 2022
in 2019 to 2022
XL-train Technology Application Profile
Fleet Formation:
Optimization
The key to traffic volume growth is the availability of the necessary rolling stock capacities for large containers. In 2019 to 2022, we significantly expanded our fleet to meet the growing demand.
Elena
Androsova
Head of Account Settlement Management Section, Commercial Directorate
rail carsfleet managed by UTLC ERA
as of the end of 2022
It is crucial to avoid any deficit or surplus, which can be achieved by regularly assessing the current needs.
- Predicted traffic volume
- Rail car turnaround
- Lack of China–Europe and Europe–China cargo flow balance
- Share of integrated XL-trains
- Traffic volume in optimization directions
per month
XL-train Quantity Profile, trains
platforms
Moreover, the rail car ownership on a rental and leasing basis enables:
Customer Portfolio
A number of factors drove the active growth of UTLC ERA’s customer portfolio in 2022. They include the high reliability, service quality and customer support levels.
companies
Attracted for integrated services year to date
including
New customers under direct contracts
Yuliya
Kostikova
Deputy Head of Customer Service Section, Commercial Directorate
China–Russia Traffic Development
Growth of the total traffic volume from China to Russia by 2021
Refrigerator Traffic
Paperless Traffic:
Innovative Development
Main Digital Development Areas
Kirill
Anpilov
Head of Information System Support Section
Internal Business Process Automation
In 2022, the company kept developing its internal information computing system functionalities, including the following:
-
Development and commercial launch of the calculation and accounting functionalities in the rate system for the company’s customers
-
Development and pilot launch of the functionalities to reconcile mutual accounts with co-contractors
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Optimization of the en-route rail car uncoupling recording mechanism to enable accurate calculation of the consumed services for transit container unit train tariff payments
-
Automation of the company’s business unit processes, upgrade and optimization of various system algorithms, including generation of certificates, integration with related systems, generation of traffic requests and invoices, etc
Corporate Website
We are ready to launch the updated corporate website with a new fully functional personal account for UTLC ERA’s customers, which includes the traffic cost calculation, traffic request submission and recording, traffic tracking and monitoring, and mutual settlements.
E-Waybill
The company cooperates with carriers to address the utilization of e-waybills and electronic shipping documents for container traffic on UTLC ERA’s routes. The Electronic Shipping Documentation and Data Conveyor Project is currently pending approval. It is intended for digital support of traffic operations in the 1,520 track gauge area and information interfaces with the LOGINK national digital platform in China.
Maintaining Our Achievements
Elena
Lazutova
Director of Financial and Economic Department
Financial Overview
Despite the significant aggravation of the geopolitical and macroeconomic situation in 2022, which resulted in an overall decline in economic activity and cargo traffic volumes, along with the continuing epidemiological restrictions in China early in the year, UTLC ERA succeeded in maintaining its volumes on the principal routes at the levels achieved in 2021.
This was possible due to the expansion of the additional route list, keeping the rates for our customers at the 2021 level on the basic routes and other actions taken by the company to attract cargo flows and reduce the net traffic costs. This improved the company’s cost efficiency as of the end of 2022.
The accelerated traffic volume recovery following a decline in the second quarter of 2022 enabled a budget adjustment at the end of the first half of 2022 to reflect the improvement of all main production and financial performance indicators as compared to the budget adjustment at the end of the first quarter of 2022. UTLC ERA’s adjusted budget targets were exceeded by 6.0% in terms of gross profit and by 15.5% in terms of net profit.
Financial Performance Profile, 2020 to 2022, million rubles
Revenue
Out company’s gross revenue for 2022 was 55,577 million rubles, which is 9,274 million rubles or 14% less than last year. The revenue for 2022 is exclusively made up of transportation and freight forwarding service revenue mainly nominated in US dollars.
The revenue reduction is primarily caused by the reduction of the average annual US dollar exchange rate in 2022 by 7% as compared to 2021 (68.58 rubles in 2022, 73.66 rubles in 2021), because the revenue is nominated in US dollars; another reason is volume re-allocation by increasing the percentage of low-cost traffic.
UTLC ERA’s Revenue, 2020 to 2022 (million rubles)
Cost of sales
UTLC ERA’s cost of sales as of the end of 2022 was 47,765 million rubles, which is 9,125 million rubles or 16% lower than the cost of sales in the previous year. The cost of sales for 2022 is exclusively made up of transportation and freight forwarding service management costs.
The reduction in the cost of sales is primarily caused by the cost optimization actions and the reduction in the exchange rate of the principal cost currencies as compared to 2021.
UTLC ERA’s Cost of Sales, 2020 to 2022 (million rubles)
Cost of Sales Structure in 2022 (%)
The fees paid to infrastructure owners in 2022 included in the cost of services amounted to 81% or 38,459 million rubles. The total infrastructure fees actually paid in 2022 reduced by 15.5% as compared to the actual total amount in 2021, which is comparable with the total net cost reduction due to the cost optimization actions and the reduction in the exchange rate of the principal cost currencies as compared to 2021.
Miscellaneous significant costs, which make up 10% of the net cost, are the costs for the managed rail fitting platform fleet, including the operation and amortization of the right of use asset (platforms allocated on the financial leasing basis). Starting from mid-2019, the company expanded the fleet under its management by adding rented and leased platforms. As of the end of 2022, the rented fleet made up 33%, while the leased fleet made up 31% of the company’s total operating fleet.
Due to the increasing portion of the fleet acquired on the financial and operating leasing basis, as well as the adoption of Federal Accounting Standard 25/2018 – Rental Accounting starting from 01.01.2022, the company succeeded in additionally optimizing its fitting platform fleet acquisition costs in its net cost structure in 2022.
Gross profit
million rubles
UTLC ERA’s gross profit in 2022, which is 2% less than in 2021.
The gross profit as of the end of 2022 amounted to 7,812 million rubles, which is 149 million rubles or 2% less than in the similar period of the previous year. However, the gross profit cost efficiency grew in 2022 as a result of the proactive net cost reduction due to net cost optimization, decreasing average annual US dollar exchange rate and the adoption of Federal Accounting Standard 25/2018.
UTLC ERA’s Gross Profit for 2020 to 2022 (million rubles, including cost efficiency), million rubles
Management costs
UTLC ERA’s management costs for 2022 amounted to 1,351 million rubles, which is 16% more than in 2021.
Management Cost Structure in 2022
Profit on Sales
Ekaterina
Solovieva
Deputy Chief Accountant — Department Director
million rubles
UTLC ERA’s profit on sales in 2022, which is 5% less than in 2021.
The profit on sales reduced due to the reduced gross profit and the increased management costs.
UTLC ERA’s Profit on Sales for 2020 to 2022, including cost efficiency (million rubles)
EBITDA
million rubles
UTLC ERA’s EBITDA for 2022, which is 761 million rubles or 11% less as compared to the previous year
EBITDA is calculated on the basis of Financial Statement Form 2 according to the Russian Accounting Standards as profit before amortization, interest and exchange rate difference as part of the miscellaneous revenue and costs.
EBITDA, including cost efficiency (million rubles)
Net Profit
million rubles
UTLC ERA’s net profit for 2022, which is 160.6 million rubles or 3% more than in 2021.
Net Profit, including cost efficiency (million rubles)
IFRS Financial Statements
UTLC ERA’s IFRS Financial Statements include the company’s performance indicators as of December 31, 2022.
Revenue
million rubles
-15%
UTLC ERA’s revenue as of the end of 2022 reduced by 15% or 9,470 million rubles as compared to 2021 and amounted to 55,375 million rubles.
Gross profit
million rubles
-11%
The company’s gross profit was equal to 7,682 million rubles, which is 11% or 970 million rubles less than in 2021.
Operating profit
million rubles
-6%
The operating profit was 6,327 million rubles, which is 6% or 407 million rubles less than in 2021.
Net profit
million rubles
-4%
The net profit reached 4,761 million rubles, which is 4% or 208 million rubles less as compared to the previous year.
Net debt
million rubles
-12%
The net debt was equal to 2,742 million rubles, which is 12% or 390 million rubles less than in 2021. The net debt reduction is related to the increase in cash and cash equivalents.
Caring for Business Climate
We make efforts to shape the favorable regulatory environment to promote the high service quality.
Marina
Lipatova
Deputy Head of Administration
In 2022, the company’s representatives actively participated in the operation of working bodies and task forces under the Ministry of Transport, the Ministry of Finance, the Federal Customs Service and other federal executive bodies of the Russian Federation, the Eurasian Economic Commission, as well as the platforms provided by business associations such as the Russian Union of Industrialists and Entrepreneurs, the Russian Chamber of Commerce and Industry, the Eurasian Union of Rail Freight Traffic Participants, the Digital Transport and Logistics Association, the National Freight Forwarders Association of the Republic of Kazakhstan, the Coordinating Council on Trans-Eurasian Transportation, the Organization for Cooperation between Railways.
This helped pursue and promote UTLC ERA’s interests in multiple critical areas in 2022:
-
Amend the Resolution adopted by the Board of Directors of the Bank of Russia dated 25.03.2022 regarding establishment of the total amount of individual transactions for residents and non-residents (limitation of advance payments to 30%) to the extent related to exclusion of transportation and logistics services provided to manage and carry out rail transportation operations
-
Incorporate the company’s position in the development of the draft recommendation by the Eurasian Economic Commission Board On Mixed Traffic Management in the Eurasian Economic Union and Proposals to Improve the Container Traffic Laws of the Eurasian Economic Union
-
Enable the multiple use of a foreign container (during the temporary import period) for domestic traffic within Russia. Federal Law No. 92-FZ dated 15.04.2022 On Amendments to Certain Legal Acts of the Russian Federation was adopted
-
Propose to amend Article 145 of the EAEU Customs Code in order to simplify the readdressing procedure for goods transported by rail under the customs transit procedure. The Russian Ministry of Finance is currently making efforts to duly approve this initiative
-
Reduce the number of inspections made by customs authorities at the rail border crossing points. The corresponding resolution of the Russian Federal Customs Service is incorporated in the customs risk management system
-
To draw the attention of the Russian customs authorities to the need to eliminate the formalist approach to the withdrawal and seizure of goods. This matter was discussed at the meeting of the Standing Committee of the Expert Advisory Board for Customs Policy Implementation under the Russian Federal Customs Service
-
Incorporate the company’s position in the development of amendments to the EAEU Customs Code regarding the simplified transfer of foreign containers across the EAEU customs border. The Eurasian Economic Commission is currently developing the draft minutes to introduce the corresponding amendments into Appendix No. 1 to the Treaty on the Customs Code of the Eurasian Economic Union (dated 11.04.2017)
Next section
Sustainable development
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