Expenses

In 2015, operating expenses amounted to RUB 199.0 billion, down 2.9% year-on-year.

Payroll costs amounted to RUB 30.8 billion, which is 99.1% of the previous year’s level. Expenses on materials amounted to RUB 7.5 billion, or less than 88.1% of the 2014 level. Savings came from cost optimisation and reduced costs of rolling stock repair and maintenance achieved through the use of reusable materials in production.

Fuel and electricity costs totalled RUB 1.2 billion, down 11.2% year-on-year. Fuel and electricity consumption was reduced by 9.955 t c.e., including through measures to optimise the consumption of electricity and fuel resources.

Other material costs totalled RUB 25.9 billion, demonstrating a 13.4% reduction year-on-year. Cost optimisation measures enabled the reduction of passenger carriage repair, maintenance and preparation costs.

Depreciation charges were RUB 13.8 billion, down 3.2% year-on-year.

Other costs amounted to RUB 111.5 billion.

In 2015, the actual volume of passenger carriage repairs performed at carriage repair plants reached 1,646 carriages, including 1,234 carriages receiving stage one overhaul (KR-1) and 412 carriages receiving stage two overhaul (KR-2).

The Company repaired 701 carriages using its own resources.

Actual expenses amounted to RUB 5.4 billion (63.0% of the 2014 level due to a reduction in the volume of passenger carriage repairs), including:

• RUB 4.4 billion — passenger carriage overhauls by third parties (64.1% of the 2014 level);
• RUB 0.7 billion — passenger carriage overhauls using own resources (58.3% of the 2014 level);
• RUB 0.3 billion — buildings and structures overhauls by third parties (60.0% of the 2014 level).

Starting from 2010, the Company has been implementing a range of cost optimisation measures. In 2010–2014, the economic impact of these measures totalled RUB 39.0 billion.

In 2015, the impact of the Stabilisation Programme in terms of passenger services amounted to RUB 14.6 billion.

The implementation of anti-crisis measures helped achieve cost reductions related to a decline in passenger traffic. Specifically, payments for Russian Railways infrastructure services were down by RUB 1.1 billion, with locomotive lease payments reduced by RUB 0.5 billion.

The volume of rolling stock repair and maintenance was also reduced, leading to lower requirements in new materials and repair of reusable materials.

To ensure the effective implementation of the budget and HR policies the Company is taking a number of HR-related organisational measures related to the closure and reorganisation of certain branches and their structural units.

During 2011–2014, nine structural units within branches were closed; and in 2015, the Company had to close five structural units within branches, reorganise four structural units with the least workload and implement HR-related organisational measures, which took effect in Q1 2016, to close four structural units within branches and transform two passenger carriage depots into carriage sites.

At the same time, it should be noted that the Company is taking appropriate measures to retain highly-skilled staff in accordance with the labour law, FPC’s Collective Bargaining Agreement, and the Industry Agreement of Railway Transport Organisations.

To minimise social tensions meetings are held with employees and primary trade union organisations, and cooperation is maintained with governing bodies of constituent entities of the Russian Federation.

Despite the traffic declines, our headcount optimisation efforts drove an increase in productivity by 0.5% in 2015.

The route network improvements, closure or refocus of depots and carriage sites, transformed governance structure, e-ticket sales and improved technical processes optimised the average headcount across the Company to 66,515 FTEs — a reduction of 5,114 FTEs, or 7.2% year-on-year.

In 2015, the average headcount in transport services came at 60,808 FTEs, of which:

• crew headcount is 34,490 FTEs (a reduction of 2,322 FTEs, or 6.3% year-on-year);
• non-crew headcount is 25,318 FTEs (a reduction of 2,763 FTEs, or 9.5% year-on-year).

The operations staff increased its productivity in money terms by 5.1% year-on-year, and the production staff — by 4.6% year-on-year.