United Wagon Company Company Presentation
UWC is the leading railcar holding in Russia and the CIS 2 No.1 by innovative car product range No.1 in freight car production TOP 5 in the operating lease market ENGINEERING PRODUCTION LEASE AND OPERATION Railcar production 15,000 railcars in own fleet 2 > 200 patents in the CIS > 100 designers and engineers Component production JV 1 Noted: (1) UWC owns 19.98% in First Heavy Haul Company (2) As at 31.03.2017 SERVICE 22,000 railcars 90,000 tonnes of castings Annual capacity Own flagship service centre > 55 partner service centres
Efficient business model provides competitive advantages 3 ENGINEERING PRODUCTION In-house R&D centre Focus on innovative railcars Own bogie model > 20 leading industry scientist and experts New railcar models and production technologies Modern production facilities Own castings and components production Market demand CLIENT Railcars Railcars Repair and maintenance Railcar lease and transportation SERVICE OPERATIONAL LEASE AND TRANSPORTATION Partner service centres throughout the country (> 55) Own core service centre for UWC railcars Repair and maintenance Additional distribution channel Large loyal clients Innovative railcars 70% of the own fleet Average own fleet age < 3 years (4x less than network s average) UWC advantages UralVagonZavod Altaivagon RM Rail Ruzhimmash ZMK Focus on innovative railcars Modern production facilities Own castings and components production In-house leasing company Own efficient bogie model
% RUB bln ths railcars RUB bln Impressive results over the short history 4 +129% production output CAGR for 2012-2016 +102% CAGR EBITDA 2012-2016 Operational results Production output Financial results Revenue 15.9 48.5 9.6 12.4 36.9 1.3 3.9 2.2 3.1 17.1 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Market share 1 41% 39% EBITDA 13.7 7.1 1% 4% 15% 0.8 1.4 3.6 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Notes: (1) According to Industrial cargoes, among railcar manufacturers in the CIS; (2) 2015 and 2016 results do not include Vostok1520 LLC results which was sold in November 2016
Technical and economic advantages of UWC railcars 5 Standard gondola UWC innovative gondola Cost advantages Bogie 18-100 Barber Gondola +RUB 1,000/day saved (+85% to the current market rate for the standard gondola) +RUB 2.3 mln saved for 10 years (at 13% discount rate) Capacity, t 65-70 75-77 Shipment tariff per ton drops by 10-15% Impact on the railway infrastructure Base 3% less Special empty run tariffing: saving up to 30% Service life 22 years 32 years Fleet renewed less frequently CUR (current uncoupling repair) frequency 1 27.4 3.1 Lower maintenance costs Maintenance schedule Before the 1 st depot repair 3 years 8 years Before overhaul 11 years 16 years Life cycle cost 3 times lower Before wheelset change 5-7 years 10-12 years Note: (1) per 1 mln km run. Based on 2016 results. Source: UWC
Product line development 6 * Accrued Certified models and modifications * Solid-bottom gondolas 25 tf 92 m 3 Gondolas with unloading hatches 25 tf: 88 m 3, 92 m 3 Grain hoppers 25 tf: 101 m 3, 120 m 3 Mineral fertilizers hoppers 25 tf 101 m 3 Cement hoppers 25 tf 72 m 3 40 Mineral fertilizers hoppers 25 tf 120 m 3 Chemical tankers 25 tf: methanol, ammonia, caustic Container flat cars 40 ft 25 tf Timber flat cars 40 ft 25 tf Others 60 Specialized railcars: box cars, flatcars and other Articulated railcars Railcars with 27 t per axle bogie Chemical and LPG tank cars Others Container flat car 40 ft 23.5 tf 20 Others 2013-15 2016 2017-18
Transport and leasing companies Cargo-generating companies More than 100 companies carry cargoes in UWC railcars 7
ths units RUB bln t-km ths t-km UWC benefits from the market s growth 8 Demand drivers UWC enjoys unique position Supply drivers Turnover grows +1.9% 2,342 2,298 2,304 Unique products Monthly freight turnover +92% 476 248 The number of manufacturers in Russia falls 19 11 2014 2015 2016 Old generation railcar Innovative railcar UWC 2012 2016 More railcar write-offs x2.9 111.5 100.6 Potential daily revenue +60% 2,160 1,350 A share of innovative railcars in the total Russian output grows x2.3 70% 37.9 30% 2014 2015 2016 Old generation 1 railcar Innovative 2 railcar UWC 10M 2014 2014 10M 2016 2016 Larger demand for railcars Advantages over other manufacturers Growth perspectives The market shifts from quantitative to qualitative changes
ths railcars Strategy ensuring efficiency growth 9 Reserve capacity for building up production Production level and capacity 15 22 22 15.9 18-20 12.4 1 Operational efficiency increase 35% 2015 2016 2017E Localized components production UWC s own made components as a share of total cost of components 43% 50% 2015 2016 2017E Product range extension 2 New products with high added value development 20 40 60 3 Sales market extension 2015 2016 2017-2018E Export development 10-20% 0% 1% 2015 2016 2017-2018E
Contacts 10 Investor Relations +7 (499) 999 15 20 IR@uniwagon.com http://www.uniwagon.com/ Research and Production Corporation United Wagon Company 7/11 bld. 1, Novokuznetskaya st., Moscow, Russia, 115184 Office: +7 (499) 999 15 20 Fax.: +7 (985) 999 15 21