Volodymyr Pryhodko, chief executive officer for Kremenchuk-based Kryukiv Railcar, should be in the mood for some champagne since his company sold two Tarpan passenger rapid trains to Ukrzaliznytsya, state-owned railway operating monopoly. Kryukiv Railcar received Hr 400 million for two trains, which is a substantial input into company's income statement since its last year net earnings stood at Hr 339 million, more than two times down from 2012.
Trains were assembled in 2012-2013 and remained unveiled as there was
not much demand for them neither on the domestic, nor on the foreign market.
Moreover, Ukrzaliznytsya is also considering an order of up to 15
passenger suburban trains in 2015, according to the company’s press release.
This comes as a great relief for major Ukrainian railway machinery producer,
since its production was down by 80 percent as of end of February due to
escalating of tension in relations with Russia which is Kryukiv Railcar’s key
foreign client.
Meanwhile, Maksym Burbak, infrastructure minister, foresees increase of
the rapid transportation’s share on the Ukrainian market.
One of the two trains sold completed its first journey on June 24,
bringing passengers from Kyiv to Lviv in western Ukraine. Another one will join
the squad of Ukrzaliznytsya’s railcars on July 1, linking Kyiv with Odesa,
country’s major seaport and popular vacation destination.
Ukrzaliznytsya listed Kryukiv trains in the prestigious Intercity+
category which provides fastest travelling with a relatively high comfort.
However, many complain about the lack of Wi-Fi connection to the Internet,
unless you are travelling in the first class.
Previously, Intercity+ category had been occupied by ten South Korean
Hyundai Rotem trains. Despite their more than 20 percent higher price in
comparison to Kryukiv Railcar trains, Ukrainian government yet in 2010 made a
decision to purchase them to boost country’s rapid transit. Borys Kolesnikov,
former deputy prime minister and ex-president Viktor Yanukovyuch’s close ally,
was a key lobbyist of the deal.
However, Hyundai trains experienced numerous technical problems during
the winter of 2012-2013 – the first time they felt Ukraine’s harsh winter
temperature regime. Posts from angry Hyundai Rotem passengers stuck in the
middle of Ukraine’s nowhere were among the most popular over social media
during that winter.
“We want to support the local producer.
But comfortable travelling is the most important thing for us, without any
emergencies, especially during the winter,” said Denys Sukhovsky, passenger at
Kyiv Central Railway Station, recalling accidents with Hyundai trains.
Viktor Ostapchuk, one of Ukrzaliznytsya’s former senior managers,
admitted he was pushed to buy Hyundai trains. “If the
decision was up to me, I wouldn’t buy Korean trains,” he
said in an interview with Center for Transport Strategies. “But the decision
with whom to sign a contract with was made on a governmental level.”
Oleksandr Parashchiy, head of research at Concorde Capital investment
company, sees an opportunity for Kryukiv Railcar to refocus its operations from
the production of freight railcars to passenger trains as encouraging. However,
he’s critical about Ukrzaliznitsya’s plans to deepen its cooperation with the
Kremenchuk-based plant in 2015. “Since demand for Ukrainian railcars from
Russia is unlikely to be renewed, Kryukiv will be heavily dependent on orders
from Ukrzaliznytsya in the future. At the moment, the chances of Ukrzaliznytsya’s
possible 2015 order don’t look certain, given the poor history of the state
monopoly’s long-term purchase plans being fulfilled,” he said.
Investors shared Parashchiy’s critical mood. Kryukiv Railcar’s shares
traded on the Ukrainian Exchange slightly appreciated on June 24, after the
release of the news on its cooperation with Ukrzaliznytsya, followed by an
upward movement the next day, gaining some 0.85 percent in price during
those two days. However, June 26 trading session cleared off all the progress
made by the shares. Equity holders are too tired of listening to Ukrzaliznytsya’s
giant plans to believe the optimistic promises from the corporate management,
even when they’re about cooperation with a local producer – Kryukiv Railcar.
They want to see some real action to make positive investment decisions.
Kyiv Post staff writer Iana Koretska can be
reached at [email protected].
