By the end of the first half of 2025, the financial situation of Russian Railways (“RZhD”) continues to deteriorate rapidly. Freight volumes declined by 7.3% year-on-year, with the largest drops in grain shipments (–35.6%), industrial cargo (–19.4%), and construction materials (–17%). This downward trend has been observed for the third consecutive year.
The company’s net profit fell by 95%, down to $33.9 million. Amid shrinking cargo flows, RZhD expects to lose $1.1 billion in revenue in 2025. At the same time, the company’s updated financial plan is considered unrealistic given the increasing debt burden and falling profitability.
The corporation has cut investments and suspended infrastructure projects aimed at expanding exports to China. Track modernization and equipment purchases have been frozen. Since July, employees have been forced to take two unpaid leave days per month. Despite this, 30,000 employees of RZhD’s internal security forces are armed with firearms of up to 20mm caliber, which poses risks of escalating social tensions.
The crisis unfolds amid corruption scandals. The company’s senior management is accused of embezzling millions. One recent example: on August 2, the monopolist’s energy director, Valentyn San’ko, was arrested on charges of embezzling over $18.5 million.
Despite the company’s systemic role in the economy, anticipated state support is unlikely to be effective given the rapidly growing budget deficit.
