Largest Employer in Russia Posts Massive Losses
In a stark indicator of Russia’s economic woes, Russian Railways (RZD) — the country’s largest employer with over 800,000 staff — has reported a net loss of ₽4.207 billion ($52.6 million) under Russian Accounting Standards (RAS) for January to September 2025. This marks a dramatic reversal from the ₽44.7 billion ($558.8 million) profit recorded in the same period last year.
Despite the loss, RZD’s revenue grew 10.1% to ₽2.298 trillion ($28.7 billion), with gross profit rising 12.4% to ₽474.8 billion ($5.9 billion) and profit from sales increasing 16.5% to ₽319 billion ($4.0 billion). However, escalating liabilities — long-term obligations rising to ₽2.4 trillion ($30 billion) from ₽2.1 trillion ($26.3 billion) — highlight mounting financial pressures.
RZD isn’t merely a transportation giant; its subsidiaries span telecom, security, manufacturing, and more, making it a cornerstone of Russia’s industrial landscape. The downturn is largely attributed to Western sanctions imposed over Russia’s invasion of Ukraine, which have curtailed exports and disrupted supply chains.
Freight loading on RZD’s network plummeted 6.7% year-on-year to 830.2 million tons, reflecting reduced demand for key commodities like coal, oil, and ores. In the Far East, coal loading fell 4%, while overall freight turnover showed mixed results across regions. The impact of sanctions has been profound since 2022, leading to part shortages, labor deficits, and frozen investments. Cargo volumes hit a 15-year low in 2024, exacerbated by shortages of locomotives and a pivot toward Asia that strained capacity.
For 2025, RZD plans to slash spending by around 40%, potentially delaying infrastructure projects and affecting suppliers. This follows a 95% drop in net profit to ₽2.7 billion ($33.8 million) in the first half of the year. Labor challenges are intensifying, with RZD implementing furloughs and unpaid leave for office workers — three days per month — to cope with declining volumes. Management job cuts are also on the horizon as the economy slows. These measures echo broader industrial furloughs across Russia’s war economy, which is showing signs of stalling amid high inflation and near-zero growth.
RZD’s struggles underscore vulnerabilities in Moscow’s logistics backbone, crucial for military operations in Ukraine. Reduced freight capacity could hinder troop and supply movements, amplifying the sanctions’ bite. As Russia’s industrial titans grapple with these headwinds, the railway’s losses signal deeper economic fractures, with potential ripple effects on employment and stability nationwide.
