Russian Railways expects to pay $7 billion in interest costs next year, a rise of around $4 billion from 2023, according to a company document seen by Reuters. The state-owned monopoly, which transports an average of 3.3 million metric tons of cargo per day, is struggling with high interest rates that have already hit 21%.
The company’s net debt is expected to rise to $39.6 billion in 2025, up from $2.54 trillion as of June 30, 2024. Russian Railways has earmarked 687.5 billion roubles ($6.91 billion) for interest payments next year, a near six-fold increase on 2023.
The high interest rates are hitting the company’s investment growth, with a planned spending reduction from 1.275 trillion roubles this year to “more than 1 trillion roubles” in 2025. The rise in interest costs will also impact Russian Railways’ earnings, with its 2025 annual profit forecast at 81.6 billion roubles, less than half that in 2023.
The central bank forecasts its average rate range in 2025 at 17-20%, and the company’s debt portfolio is pegged to this key central bank rate, meaning it will likely rise further. Russian Railways is Russia’s largest employer, with 685,200 people on the payroll as of the end of 2023.
The high interest rates are also affecting other businesses in Russia, with the TsMAKP think tank saying that the interest payment burden has reached a five-year high. The central bank’s hawkish stance and its efforts to tackle inflation by raising interest rates have also raised concerns about the impact on economic growth.
Source: https://www.reuters.com/markets/europe/russian-railways-expects-interest-costs-hit-7-bln-2025-2024-11-14