Russian Railways (RZD) has published its H1 2025 financial report. The numbers speak for themselves: the rail operator is not managing to run a meaningful profit. Let’s take a closer look at the report to see what is going on.
At first sight, Russian Railways has run a pretty good first six months of 2025. Income from both freight (+9%) and passenger traffic (+13%) is up. In total, the company ran a revenue of 1,77 trillion rubles (17,70 billion euros), compared to 1,6 trillion rubles (16,00 billion euros) in H1 2024.
On the cost side, there are various interesting things to note. For one, salary payments have risen considerably: from 617 billion rubles (6,17 billion euros) to 716 billion rubles (7,16 billion euros) (+16%). The growth in wage expenses reflects growing salaries to attract (and keep) more personnel. Like the rest of the Russian economy, RZD still faces a widespread labour shortage.
Russian Railways has seen growing energy (+10%) and depreciation costs (+19%) as well. In H1, RZD added 224 billion rubles (2,24 billion euros) in depreciation costs, quite a bit more than in the same period of 2024. During those six months, depreciation totalled 187 billion rubles (1,87 billion euros).
More assets = more depreciation?
The higher rate of depreciation could be explained by RZD’s growth in asset terms. For example, the company commissioned around 150 to 170 billion rubles (1,50–1,70 billion euros) worth of infrastructure and acquired dozens of billions in machines, equipment and rolling stock. Those contribute to depreciation once acquired.
Click to view depreciation breakdown per asset category
| Asset category | H1 2024 (bn RUB) | H1 2025 (bn RUB) | Change (%) |
|---|---|---|---|
| Transport vehicles (total) | 55,8 | 69,4 | +24% |
| Passenger rolling stock | 18,4 | 23,5 | +28% |
| Locomotives | 31,0 | 37,0 | +19% |
| Machines and equipment | 59,1 | 67,6 | +14% |
| Track structures | 29,9 | 35,2 | +18% |
| Other structures & transmission devices | 25,6 | 32,1 | +25% |
| Buildings | 5,6 | 6,3 | +12% |
The infamous Russian interest rates
Besides wages, energy costs and depreciation, there are no noteworthy changes in operational expenses. However, things get interesting when looking at RZD’s financial expenses. Those have skyrocketed in the past year, an expected consequence of Russia’s interest rate. Earlier in 2025, the Russian Central Bank had a peak interest rate of 21%.
Whereas in H1 2024 RZD spent around 110 billion rubles (1,10 billion euros) in financial expenses, that had grown to 259,6 billion rubles (2,60 billion euros) in H1 2025. The lion’s share of that can be attributed to interest payments, which grew by 140% from 104 billion rubles (1,04 billion euros) to 242 billion (2,42 billion euros).
Hedging, typically done to mitigate financial risk, also made a little dent in RZD’s finances. The effect of hedging was positive in the first half year of 2024, contributing 1,8 billion (18 million euros) to the operator’s coffers. In the same period of 2025, hedging resulted in a loss of 6,4 billion rubles (64 million euros).
The bottom line
How, then, does the overall picture look? When it comes to operational results (EBIT), things are looking quite alright for RZD. Despite the economic circumstances, the company managed to achieve an operational profit of around 264 billion rubles (2,64 billion euros). Again, that is primarily thanks to higher freight revenues.
Yet, when factoring in interest rate payments, things are not looking up. Net profit was only 4,4 billion rubles (44 million euros), down from 114 billion rubles (1,14 billion euros) in H1 2024 (-96.1%). The good news, for RZD at least, is that the interest rate is the main culprit for the disappointing figures. The Russian Central Bank has been under pressure from the business community to lower interest rates, and has been doing so in recent months. That could provide some much-needed financial relief and help RZD to turn a larger net profit in the year ahead.