In 2016, the Company’s operating revenues were RUB 201.2 billion, up 11.0% year-on-year, with 3.9% more passengers carried as compared to 2015.
Revenue from passenger transportation
In 2016, revenue from passenger transportation increased to RUB 180.1 billion, up 12.6% year-on-year. One of the key drivers behind this growth was an additional price indexation of 7.3% vs 2015, pursuant to a decision of the Russian Government to amend paragraph 2 of Article 164 of the RF Tax Code to set a VAT rate of 10% for long-distance public rail services for passengers and baggage (Federal Law No. 386-FZ dated 29 December 2015).
Revenue in the deregulated segment increased to RUB 85.6 billion, or by 16.4% from 2015.
Revenue from domestic services was RUB 70.2 billion, up 20.9% year-on-year. This growth was driven by higher passenger turnover in the segment (up 7%), price indexation (+5%), and an additional indexation of 7.3% vs 2015.
In 2016, international traffic continued to decline, particularly on trains made up in the CIS and Baltic states (down 10.8% year-on-year), which negatively affected the related revenue. At RUB 15.4 billion, it was 99.8% of the 2015 level.
Revenue in the regulated segment totalled RUB 94.5 billion, up 9.3% year-on-year.
Revenue from domestic passenger rail services in the regulated segment was RUB 87.7 billion, an increase of 10.3% year-on-year. The increase was driven by higher passenger turnover in the segment (up 3.8%), price indexation (+4%), and an additional indexation of 7.3% vs 2015.
Revenue from baggage, unaccompanied baggage, and mail transportation totalled RUB 6.9 billion, down 2.7% year-on-year. The decrease was due to a decline in baggage and unaccompanied baggage turnover in the Company’s own and leased baggage carriages by 9.6% year-on-year and tariff indexation by 4%.
VAT rate change
In order to reduce the burden on the federal budget and support the Russian mechanical engineering sector, Federal Law No. 401-FZ dated 30 November 2016 amended the Tax Code of the Russian Federation to set a VAT rate of 0% for long-distance public rail services for passengers and baggage for the period between 2017 and 2029.
Revenue from other activities
Other business activities include repairs of non-owned rolling stock, additional on-train services, leasing rolling stock and real estate to third parties, etc.
In 2016, revenue from other activities totalled RUB 21.1 billion, down 0.6% year-on-year.
At the same time, in 2016, the demand for leasing of carriages to third-party clients was down by 3.7% year-on-year, and the demand for repairs of non-owned rolling stock dropped by 5.2% as compared to 2015, resulting in a considerable decline in revenue from other activities over the year.
In 2016, revenue from other activities accounted for about 10.5% of the total revenue, against 11.7% in 2015.