How much does Russian Railways actually earn and where does the profit go?

"Russian Railways" is the largest carrier in the country. 99% of all highways are managed by the state holding. Moreover, half of the lines are electrified. This is the highest rate in the world. If we take the global rating of transport companies of the whole planet, then Russian Railways has been confidently among the top three for many years. This is due to the huge volumes of passenger and freight traffic. Given that this is a state-owned company, citizens are interested in the question of how much it actually earns and how the management manages the profits. But it is not so easy to answer it.

How much did Russian Railways earn in 2022

A reasonable question, but there is no answer to it yet. The holding includes many companies, so reporting takes a lot of time. Russian Railways often publishes information about profits and expenses for the year in the early spring of the following year. Therefore, it is not yet possible to find out how much the state-owned company earned in 2022. The reports will be released later. But for now, you can get acquainted with the main aspects that affect the volume of net profit of the holding.

Technical default

Since the end of February 2022, restrictions have been imposed on many Russian state and private companies. The sanctions of the largest carrier, Russian Railways, did not pass by. The holding was banned from using foreign currencies to make payments. This prevented the payment of Eurobonds.

The CDS Commission recognized the default of the Russian state-owned company on April 11. But not standard, but technical. That is, the holding had the necessary amount, but it could not be transferred to the accounts due to sanctions.

The management of the holding has not repaid the issue of dollar Eurobonds, the nominal volume of which is estimated at about $ 605 million. Russian Railways has also not paid the accumulated income on the above-listed securities. 

Reduction of freight traffic

Last year, the transportation of raw materials fell significantly. The overall parameter of cargo transportation decreased by 3.8% compared to 2021. Moreover, the volume of transportation of almost all major types of raw materials has fallen. 

In 2022, the transportation of forest goods suffered the most ― the indicator decreased by a quarter, that is, by almost 25%. It should be noted that China remains the main buyer of wood. The lion's share of the total cargo volume (31.4 million tons) was sent to the Celestial Empire.

Last year, the loading rates of coke (almost -16%), ferrous scrap (-21.5%), industrial raw materials (-13%) and non-ferrous ore (almost -9%) fell significantly. 

Slightly lower drop rates were shown by the transportation of the following goods:

• coal;
• oil;
• fertilizers (we are talking about chemical and mineral);
• iron and manganese ores;
• grain;
• soda and various chemicals;
• cement.

Russian Railways noted the growth of container traffic. In 2022, the indicator was 1.6% higher. In comparison with 2021, there is a noticeable increase in the transportation of construction goods, and immediately by almost 6%. In total, almost 134 million tons of raw materials were shipped.

Last year there was a reorientation to the eastern markets. In this regard, the loading of raw materials at all landfills located in this direction has increased. Moreover, the indicator changed the most in the Far Eastern (+7.2%) and Trans-Baikal (+9.6%) polygons.

Experts call for further development of infrastructure in the east. This will further increase the loading, and hence the profit of the state holding. 

Increase in passenger turnover

If the situation in the field of cargo transportation worsened somewhat in 2022, then everything is different with passengers. The increase was almost 8% compared to 2021. The total passenger turnover is impressive ― it exceeded 1 billion 135.8 million.

In 2022, there was a trend of growth in demand for long-distance train tickets. And immediately by 17.8%. Quite an eloquent indicator. As it turned out, most of this is due to an increase in interest in domestic tourism. Foreign has become less accessible due to sanctions, so many Russians have decided to get to know the beauties of their homeland more closely.

The number of passengers who bought commuter train tickets also increased. In 2022, the growth was 6.8%.

As for passenger turnover only on the network of JSC "Russian Railways", last year it grew by almost one fifth. To be more precise, by 18.8%. The demand for trips within the region increased by 8.5%. Interest in tickets for long―distance train routes has increased even more - by almost 23%.

Increase in the authorized capital of Russian Railways

Last summer, the government decided to transfer a large sum to a state holding company. By decree of Prime Minister Mikhail Mishustin, the authorized capital was immediately increased by 21.88 billion rubles. 

Most of this amount appeared due to the placement of additional preferred shares. A total of 18.3 million were created . The cost of each is 1000 rubles. Thus, the government managed to attract 18.3 billion rubles. 

The remaining amount, namely 3.58 billion, was received from additional ordinary shares. The cost of one is the same as that of the privileged one. Moreover, these funds were immediately "painted". In the holding, a little more than 2 billion rubles were allocated for the reconstruction of the point "Lianozovo", which is part of the MCD-1. A number of works are planned to be carried out at this station to increase comfort and safety. 1.5 billion rubles were allocated for the maintenance of the MCD-4. The remainder of the amount, namely 0.03 billion, is aimed at creating a pedestrian crossing over the railway line to Vnukovo Airport.  

Please note that before this decree, the authorized capital of Russian Railways was 2 trillion. 723,302,181 billion rubles. This is the data for April 2022. 

It should be noted that in March, officials came to the conclusion that it was necessary to recapitalize Russian Railways. The holding was allocated an amount of 250 billion rubles as a measure to support the investment program and digitalization.  

What will the money be spent on in 2023

The expenses of the state holding for 12 months will amount to 2.15 trillion rubles. This was announced by the head of the Ministry of Transport of the Russian Federation Vitaly Saveliev. The economic justification was reviewed by the FAS and confirmed the need to allocate the specified amount. 

Vitaly Saveliev told what the money will be spent on in 2023. Russian Railways is going to continue the modernization and expansion of the backbone infrastructure. Including 250 billion rubles will be allocated for the development of the second stage of the Eastern polygon. Among the key points is also the renewal of the locomotive and wagon fleet.

For 202 billion rubles. in 2023, at least 600 locomotives will be paid for and delivered. This expense item also includes approximately 330 electric train cars.

62 new railway trains are planned to be sent to the regions. They will provide commuter routes.