FESCO Transportation Group (MOEX: FESH) announces its unaudited operational and consolidated IFRS results for the nine-month period ended September 30, 2015.
Highlights
- Transportation market rebound in 9M 2015 was weaker than expected, uncertain economic environment, FX rates fluctuations and slowdown in domestic consumption negatively impacted transportation volumes
- Focus on strengthening relationship with direct accounts and extending presence in new business segments to generate incremental revenue and maintain profitability
- In order to offset the negative influence of external factors, the Group continued to implement optimization programs aimed at cutting down costs by $40 million in 2015
- FESCO reduced CAPEX to the maintenance level, from $59.9 million for the
nine-month period of 2014 to $14.7 million for the first 9 months of 2015 - Dmitry Shokhin joined the Management Board as Vice President for Corporate and Legal affairs
Operational Overview
- FESCO port and liner container volumes were down in line with negative market trend:
- Container handling at VMTP was down by 32% YoY, to 259.2 thousand TEU
Export-import liner volumes were down by 25.5% YoY to 239.7 thousand TEU- Intermodal transportation was down by 23.1% YoY to 143.4 thousand TEU
- General cargo volumes at the port decreased by 14% YoY to 1,536 thousand tons
- Rail division results were slightly worse than the market which demonstrated c.10% decline in container transportation and 1.2% decline in overall rail cargo load in 9M2015:
- Rail container transportation declined by 11.4% YoY to 209.6 thousand TEU
- Rail cargo load declined by 2% YoY to 14.8 million tons
Group Operational Results
| 9M 2014 | 9M 2015 | YoY Dynamics | |
| Intermodal freight transportation (TEU) | 186,434 | 143,418 | -23.1% |
| Export-import sea container trade (TEU) | 321,541 | 239,651 | -25.5% |
| Domestic sea container trade (TEU) | 46,511 | 43,295 | -6.9% |
| VMTP container throughput (TEU) |
381,227 |
259,198 | -32.0% |
| VMTP general cargo throughput (excluding vehicles) (thousand tons) | 1,786 | 1,536 | -14.0% |
| Rail container transportation («RusskayaTroyka» and «Transgarant») (`000 TEU) | 236.5 | 209.6 | -11.4% |
| Rail cargo load (million tons) | 15.1 | 14.8 | -2.0% |
| Rail cargo turnover (billion ton-kilometers) | 23.3 | 27.1 | +16.3% |
Financial Overview
Group’s financial results were affected by declining transportation volumes and RUB depreciation, but
- In 9M2015, Group’s consolidated revenue decreased by 35.6% YoY to $543.5m. Consolidated EBITDA decreased by 32.7% to $88.5m
- Group EBITDA margin increased by 0.7 pp YoY in 9M2015
- In RUB terms revenue in 9M2015 was up by 7.6% YoY to RUB 32,181m, while EBITDA was up by 14% YoY to RUB 5,308m
- CAPEX was cut back close to maintenance level and amounted to $14.7m in 9M2015 (down by 75.5% YoY)
- Cost cutting program is well on track with c. 65% or $26m out of $40m targeted savings achieved in 9M 2015
Group Financial Results
| $ million | 9M 2014 | 9M 2015 | YoY&bnsp;Dynamics |
| Revenue | 844.1 | 543.5 | -36% |
| EBITDA | 131.5 | 88.5 | -33% |
| EBITDA margin | 15.6% | 16.3% | +0.7 pp |
| CAPEX | 59.9 | 14.7 | -75.5% |
| RUB million | 9M 2014 | 9M 2015 | YoY Dynamics |
| Revenue | 29,908 | 32,181 | +7.6% |
| EBITDA | 4,673 | 5,308 | +14% |
EBITDA is calculated as Profit from operating activity adding back depreciation and amortization, Impairment on tangible fixed assets and one-off expenses.
Divisional Performance
Port Division
- Container throughput in 9M2015 decreased by 32% YoY to 259.2 thousand TEU in line with negative market trends
- General cargo volumes decreased by 14% YoY to 1,536 thousand tons
- Division’s revenue decreased by 36.7% YoY to $89m on the back of weakening volumes. EBITDA declined by 28.8% YoY to $48.2m. EBITDA margin improved by 6.0 pp up to 54.2% due to realization of
cost-cutting initiatives
Rail Division
- Rail container transportation by Transgarant and Russkaya Troyka decreased by 11.4% YoY to 209.6 thousand TEU in 9M2015
- Transgarant rail cargo load decreased by 2.0% YoY to 14.8 million tons
- Rail Division’s revenue in 9M2015 amounted to $81.8m, a decrease of 34.9% YoY due to the effect of RUB devaluation
- Market trends in combination with RUB devaluation resulted in EBITDA decreased by 56.8% YoY to $15.8m in 9M2015. EBITDA margin amounted to 19.3%, down by 9.8 pp
Liner and Logistics Division
- Drop of import to Russia resulted in the decrease of
export-import sea container transportation volumes and intermodal volumes. In 9M2015,export-import sea container volumes decreased by 25.5% YoY to 239.7 thousand TEU, while intermodal container transportation decreased by 23.1% YoY to 143.4 thousand TEU - Domestic sea container transportation decreased by 6.9% YoY in 9M2015 to 43.3 thousand TEU
- The decrease of volumes and negative dynamics of global freight rates resulted in the Division’s revenue and EBITDA decrease. In 9M2015, revenue decreased by 38.3% YoY to $294.4m, while EBITDA decreased by 48% YoY to $14m
Shipping Division
- In 9M2015, Shipping Division’s revenue was up by 15.2% YoY to $66.6m, EBITDA was up 2.6 times to $21m. EBITDA margin increased from 13.8% in 9M2014 to 31.5% in 9M2015
Bunkering
- Bunkering revenue decreased by 34.6% YoY in 9M2015 to $101.4m
- The Division’s EBITDA decreased by 66.3% YoY in 9M2015 to $3.2m. EBITDA margin decreased by 2.9 pp to 3.2%
Divisional Financial Results
| $ million | 9M 2014 | 9M 2015 | YoY Dynamics |
| Port Division | |||
| Revenue | 140.6 | 89.0 | -36.7% |
| EBITDA | 67.7 | 48.2 | -28.8% |
| EBITDA margin | 48.1% | 54.2% | +6.0 pp |
| Rail Division | |||
| Revenue | 125.7 | 81.8 | -34.9% |
| EBITDA | 36.6 | 15.8 | -56.8% |
| EBITDA margin | 29.1% | 19.3% | -9.8 pp |
|
Liner and Logistics division |
|||
| Revenue | 477.0 | 294.4 | -38.3% |
| EBITDA | 26.9 | 14.0 | -48.0% |
| EBITDA margin | 5.6% | 4.8% | -0.8 pp |
| Shipping Division | |||
| Revenue | 57.8 | 66.6 | +15.2% |
| EBITDA | 8.0 | 21.0 | +162.5% |
| EBITDA margin | 13.8% | 31.5% | +17.7 pp |
| Bunkering | |||
| Revenue | 155.1 | 101.4 | -34.6% |
| EBITDA | 9.5 | 3.2 | -66.3% |
| EBITDA margin | 6.1% | 3.2% | -2.9 pp |
EBITDA is calculated as Profit from operating activity adding back depreciation and amortization, Impairment on tangible fixed assets and one-off expenses
FESCO Consolidated Financial Position
Pro-forma total debt* amounted to $851.9 million as of September 30, 2015 compared to $873 million as of June 30, 2015Pro-forma net debt amounted to $784.4 million as of September 30,2015 compared to $832.7 million as of June 30, 2015
*Total borrowings exclude the REPO loan in the amount of $69 million secured by shares of TransContainer PJSC.