China Railway Spending Slash Cuts Deep at Nation's Top Train Maker
Dou Shicong
/SOURCE : Yicai
China Railway Spending Slash Cuts Deep at Nation's Top Train Maker

(Yicai Global) Feb. 9 -- China Railway Corp. has trimmed planned rail equipment investments for this year to CNY80 billion (USD13 billion), the lowest figure in a decade, in a move that could prove problematic for the country's largest rolling stock maker CRRC Corp.

The national rail operator invested some CNY801 billion in fixed assets last year, with about CNY100 billion going toward rail equipment, China Business Daily reported. Total investments this year are pegged at CNY732 billion, falling below CNY800 billion for the first time in four years.

The company may further reduce investment, an insider said.

CRRC is China Railway's core supplier. It estimated in that it would generate CNY210 billion in revenue from electric multiple units (multi-carriage trains) from 2015 through 2020, but has slashed the figure to CNY150 billion. Earlier cuts have already made their mark on CRRC profits, which slid 9.4 percent in the first three quarters of last year. EMU earnings plunged more than 34 percent.

In the five years leading up to 2015, EMU sales in China soared and spending topped CNY230 billion, a peak which a China Railway source believes won't be beaten for some time. 

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Keywords: China Railway Corp. , CRRC Corp. , Trains , TRANSPORT