EquityStory.RS, LLC-News: Far Eastern Shipping Company / Key word(s):
Miscellaneous
Far Eastern Shipping Company: Results for the three-month and
twelve-month periods ended December 31, 2014
30.03.2015 / 16:55
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March 30, 2015
Results for the three-month and twelve-month periods ended December 31,
2014
FESCO Transportation Group (MOEX: FESH) today announces its operational and
consolidated financial results as per IFRS for three-month and twelve-month
periods ended December 31, 2014.
2014 Highlights:
- Container throughput at Port increased by 7.7% YoY to 513 thousand TEU
- Export-import sea container trade increased by 16.6% YoY to 428
thousand TEU
- Continuous weakness in the rail market and RUB devaluation affected
negatively the financial results of the group resulting in consolidated
revenue decrease by 1.9% YoY to $1,118m and consolidated EBITDA
decrease by 8.5% YoY to $177m
- Group's EBITDA margin decreased by 1.2pp to 15.8%
- To address the market headwinds the Group has developed a cost
optimization programme which started and already delivered the first
results in 4Q2014
Operational overview
- In 2014, FESCO leveraged a sustainable trend of growing bulk and
containerized cargo export across all steps of the transportation value
chain and increased trade activity in the Russian Far East
- The Group continued to increase container transportation and handling
volumes across all divisions strengthening its leading position in the
Russian Far East
- FESCO remained #1 in the Russian Far East region by total container
handling at sea port terminals with the market share of 32% and the
leader by volume on export-import sea container service lines where
the Group operates with the market share of 43%
- Export-import sea container transportation was up by 16.6% YoY to
428,137 TEU due to growing trade flows between Russia and Asian
countries
- Container throughput at Vladivostok port increased by 7.7% YoY to
513,481 TEU in 2014 distinctly outperforming the Far East container
market, the fastest growing Russian sea basin which was up by 2.3%
YoY in 2014
- Container transportation by the Rail Division increased by 13.8%
YoY to 325.4 thousand TEU in 2014
Financial overview
Group financial results were positively affected by solid growth of
container volumes across all divisions; however RUB devaluation and
continuous rail market weakness were major contributors to negative
dynamics of USD denominated financial results.
- Group's consolidated revenue decreased by 1.9% YoY to $1,118m.
Group's EBITDA decreased by 8.5% YoY and reached $177m.
- In RUB terms Group's consolidated revenue and EBITDA were up by
17.8% YoY to RUB 42,787m and up by 10.6% YoY to RUB 6,820m,
respectively
- In Port, Bunkering, Liner and Logistics and Shipping Divisions
revenue and EBITDA in RUB were up in 2014 vs. 2013. In the Rail
Division, the decrease of revenue and EBITDA in RUB was smaller
than in USD
- Group's EBITDA margin decreased by 1.2pp YoY to 15.8%. Excluding
low-margin bunkering business, Group's EBITDA margin was up YoY
- The Group demonstrated strong performance in 4Q 2014 with Port, LLD
and Shipping divisional EBITDA growth
- CAPEX spending increased due to expansion CAPEX component, which
includes acquisition of two new fuel efficient vessels, acquisition
of a dry container terminal in Novosibirsk, investments the Port
Division and in Usady project as well as acquisition of trucks and
investment in the corporate IT system. To address the macroeconomic
challenges in 2015 the Group plans to cutback the expansion CAPEX,
and keep the CAPEX at maintenance level in the range of $20-25m
Group had developed the cost optimization program which started to be
implemented in Q4 2014 and will continue in 2015. The program is focused on
maximization of cash flow by reduction of CAPEX, reduction of
administrative expenses across all divisions, decrease in operating costs
at port, optimization of fleet usage in rail and shipping, and the labour
productivity growth.
In 4Q 2014, the Group started transferring stevedoring and terminal
handling tariffs at Port for export-import cargo from RUB into USD to
improve the revenue currency structure. The Group targets to increase the
share of USD-denominated revenue for 2015 at Port division to 80%.
Group Financial Results
<pre>
$ million 3Q 4Q 4Q YoY 2014 2013 YoY
2014 2014 2013 Dynamics Dynamics
Revenue 331.0 274.2 290.1 -5.5% 1 1 -1.9%
118.3 139.7
EBITDA* 59.1 45.5 35.0 +30.0% 177.0 193.5 -8.5%
EBITDA margin 17.9% 16.6% 12.1% +4.5 pp 15.8% 17.0% -1.2 pp
CAPEX 23.6 12.8 7.4 +73.0% 72.6 47.5 +52.8%
</pre>
<pre>
RUB million 3Q 2014 4Q 2014 4Q 2013 YoY 2014 2013 YoY
Dynamics Dynamics
Revenue 11 961 12 879 9 460 +36.1% 42 787 36 321 +17.8%
EBITDA* 2 139 2 147 1 155 +85.9% 6 820 6 166 +10.6%
EBITDA margin 17.9% 16.6% 12.1% +4.5 pp 15.8% 17.0% -1.2 pp
</pre>
*) EBITDA is calculated as profit from operating activity adding back
depreciation and amortization, impairment on tangible fixed assets and
one-off expenses. In 2013, Group's EBITDA was adjusted for one-off
marketing expenses of $3.9m and one-off legal & consulting expenses of
$4.2m. In 2014, Group's EBITDA was adjusted for one-off marketing expenses
of $9.6m and one-off legal & consulting expenses of $1.6m.
Divisional Performance
Port Division
- Container throughput in 2014 was up by 7.7% YoY to 513,481 TEU driven
mostly by export volumes growth of 11.8% YoY and import growth of 8.3%
YoY as a result of continued growth of international trade between
Russia and Asia. In 4Q2014, container throughput was up by 3.8% driven
by export with import being approximately flat
- Growth of general cargo volumes by 16.7% YoY to 2,297 thousand tons
driven primarily by an increase in export volumes due to RUB
devaluation. The ferrous metals, non-ferrous metals and chemicals were
the major growth cargoes. In 4Q2014, general cargo throughput was up by
14.7% YoY to 511 thousand tons
- Revenue decreased by 7.4% YoY to $185m in 2014 (up by 11.1% YoY in RUB
terms) due to RUB devaluation. In 4Q2014 revenue decreased by 6.3% YoY
to $44.6m
- EBITDA decreased by 1.3% YoY to $93.2m in 2014 and increased by 35.5%
YoY to $25.6m in 4Q2014. The increase in 4Q2014 was driven by
historical record growth of high marginal container volumes and
reduction of costs
- As a result, EBITDA margin increased in 2014 by 3.1pp YoY to 50.3% and
increased by 17.7pp YoY to 57.3% in 4Q2014
Rail Division
- Rail container transportation by Transgarant and Russkaya Troyka was up
by 13.8% YoY to 325.4 thousand TEU in 2014 due to increased demand for
FESCO block train services and fitting platforms fleet size. In 4Q2014,
the growth amounted to 16.7% YoY to 88.9 thousand TEU
- Average fitting platforms fleet of Transgarant increased by 25.2%,
while average fleet of Russkaya Troyka grew by 2.2% in 2014
- Rail cargo load down by 1.5% YoY in 2014 to 20 million tons and down by
2% YoY to 4.9 million tons in 4Q2014
- The average rail rates continued to gradually decrease during the year
reaching the bottom in 2H2014. In 2H2014, the RUB devaluation kept the
RUB-denominated rail rates dynamics' in negative territory.
- Revenue decreased by 34.2% YoY to $165m in 2014 and decreased by 25.0%
YoY to $39.2m in 4Q2014 over the same period
- EBITDA decreased by 49.7%YoY to $45.4m in 2014 due to declined railcar
rates and FX effect. In 4Q2014, EBITDA decreased by 47.9% to $8.8m
- EBITDA margin decreased by 8.5 pp YoY to 27.5% in 2014 and decreased by
9.9 pp YoY to 22.4% in 4Q2014
Liner and Logistics Division
- Strong volumes growth was driven by export-import sea lines and
intermodal transportation on the back of growing trade with Asia, and
specifically with China.
- In 2014, export-import sea container transportation was up by 16.6% to
428,137 TEU, intermodal transportation was up by 6.2% to 258,621 TEU
- The intermodal rates were negatively affected by strengthening of
competition on international routes. Also the negative effect of RUB
devaluation put additional pressure on RUB-denominated cabotage rates.
As a result, LLD revenue in 2014 decreased by 7.1% YoY to $623m and in
4Q2014 decreased by 16.2% YoY to $146m
- EBITDA increased by 11.3% YoY to $39.9m in 2014 and increased by 35.9%
YoY to $12.9m in 4Q2014 mostly due to operational and administrative
costs cutback resulted from productivity growth and partially from RUB
devaluation
- EBITDA margin was up by 1.1pt to 6.4% in 2014 and was up by 3.4pp to
8.9% in 4Q2014
Shipping Division
- Shipping Division demonstrated strong results benefitting from the
replacement of old vessels with new more fuel efficient ones, as well
as positive results of icebreakers operations, profitable contracts
with third parties and decreased administrative costs
- In 2014, revenue increased by 24.6% YoY to $81.3m. In 4Q2014, revenue
was up by 6.8% YoY to $23.5m
- EBITDA turned from loss of $5.6m in 2013 to profit of $12.9m in 2014
and from loss of $0.2m in 4Q2013 to profit of $4.9m in 4Q2014
- EBITDA margin reached 15.9% in 2014 and 20.9% in 4Q2014
Bunkering
- Bunkering business contributed $218.4m to the Group's revenue and
$10.0m to the Group's EBITDA in 2014
<pre>
$ millions 3Q 2014 4Q 2014 4Q 2013 Dynamics 2014 2013 Dynamics
Port
Revenue 50.6 44.6 47.6 -6.3% 185 200 -7.4%
EBITDA 27.1 25.6 18.9 +35.5% 93.2 94.5 -1.3%
EBITDA margin 53.5% 57.3% 39.6% +17.7 pp 50.3% 47.2% +3.1 pp
Rail
Revenue 40.7 39.2 52.4 -25.0% 165.0 250.7 -34.2%
EBITDA 12.1 8.8 16.9 -47.9% 45.4 90.3 -49.7%
EBITDA margin 29.7% 22.4% 32.3% -9.9 pp 27.5% 36.0% -8.5 pp
Liner & Logistics
Revenue 172.2 146.0 174.2 -16.2% 623.0 671.0 -7.1%
EBITDA 17.5 12.9 9.5 +35.9% 39.9 35.8 +11.3%
EBITDA margin 10.2% 8.9% 5.5% +3.4 pp 6.4% 5.3% +1.1 pp
Shipping
Revenue 24.6 23.5 22.0 +6.8% 81.3 65.3 +24.6%
EBITDA 5.1 4.9 -0.2 - 12.9 -5.6 -
EBITDA margin 20.8% 20.9% - - 15.9% - -
Bunkering
Revenue 84.1 63.4 37.0 +71.4% 218.4 83.6 +161.3%
EBITDA 3.3 0.5 0.7 -28.6% 10.0 3.2 +210.1%
EBITDA margin 3.9% 0.7% 1.9% -1.2 pp 4.6% 3.8% +0.7 pp
</pre>
EBITDA is calculated as Profit from operating activity adding back
depreciation and amortization, Impairment on tangible fixed assets and
one-off expenses
FESCO Consolidated Group Financial Position
Pro-forma net debt amounted to $961m as of 31-Dec-2014. Pro-forma total
debt decreased from $1,118m as of 31-Dec-2013 to $1,027m as of 31-Dec-2014.
- Consolidated debt includes $550m of 8.00% Senior Secured Notes due 2018
and $325m of 8.75% Senior Secured Notes due 2020, as well as RUB 5bn of
bonds, the proceeds from which were used to refinance the Group's
acquisition-related and pre-existing debt
- As of December 31, 2014, Pro-forma Net Debt / LTM adjusted EBITDA ratio
was 5.4Ñ
<pre>
$ millions At 31 December, 2014
Pro-forma total Debt(2) 1 027
Cash 66
Pro-forma net Debt 961
Pro-forma net Debt/ LTM Adj. EBITDA 5.4x
</pre>
(2)Total borrowings exclude the $89m REPO loan secured by shares of
TransContainer
FESCO operational results for 4Q 2014 and 2014
<pre>
3Q2- 4Q2- 4Q2- Dyn- 2014 2013 Dyn-
014 014 013 amics
amics
Intermodal freight transportation* 70,2 72,1 63,9 +12. 258, 243,
+6.2%
(TEU) 42 87 78 8% 621 564
Export-import sea container trade 118, 106, 92,7 +15. 428, 367, +16.
(TEU) 999 596 21 0% 137 251 6%
Domestic sea container trade (TEU) 18,3 18,6 17,6 +5.6% 65,1 63,9
+1.9%
57 76 89 87 53
VMTP container throughput(TEU) 138, 132, 127, +3.8% 513, 476,
+7.7%
615 254 449 481 758
Import +0.1%
+8.3%
Export 60,9 51,8 51,8 +9.1% 221, 204, +11.
Cabotage 57 97 39 +2.3% 343 397 8%
48,1 48,5 44,5 182, 163,
+0.6%
33 66 21 167 004
29,5 31,7 31,0 109, 109,
25 91 89 971 357
VMTP non-container cargo 511 511 446 +14. 2,297 1,968 +16.
throughput (excluding vehicles) 7% 7%
(thousand tons)
VMTP automobiles and 18,4 15,0 22,6 - 70,3 92,9 -
transportation vehicles throughput 62 46 69 33.6% 24 38
24.3%
(units)
Rail container transportation 89.2 88.9 76.2 +16. 325.4 286 +13.
(«RusskayaTroyka» and 8% 8%
«Transgarant») ('000 TEU)
Rail cargo load (million tons) 5.2 4.9 5.0 -2.0% 20.0 20.3
-1.5%
Rail cargo turnover (billion ton- 7.9 9.6 7.8 +23. 32.9 32.3
+1.9%
kilometers) 1%
</pre>
* - excluding transportation of empty carrier owned containers (COC)
About FESCO
FESCO is one of the leading privately-owned transportation and logistics
companies in Russia with operations in ports, rail, integrated logistics
and shipping business. Diversified but integrated asset portfolio enables
FESCO to provide door-to-door logistics solutions and control almost all
steps of the intermodal transportation value chain. The majority of FESCO's
operations are located in the Russian Far East and the Group benefits from
growing trade volumes between Russia and Asian countries.
FESCO is the leader of container transportation through the Russian Far
East via international sea container lines to/from Asian countries,
domestic sea container lines and by rail. FESCO is the leading port
container operator in the Far East region.
FESCO controls the Commercial Port of Vladivostok which has throughput
capacity of 3.9 million tons of general cargo and oil products, 150,000
vehicles and over 600,000 TEU of containers. In 2014, total container
throughput at the Commercial Port of Vladivostok reached 513,481 TEU FESCO
is among the 10 largest Russian private rail operators, providing services
under "Transgarant" (100% subsidiary of FESCO) and "Russian Troika" (50%
joint venture with JSC Russian Railways) brands. "Transgarant" operates a
fleet of 16.5 thousand units of rolling stock, while "Russian Troika"
operates a fleet of 1.7 thousand container platforms. FESCO has a fleet of
22 vessels, mostly deployed through own sea service lines, and 4
icebreakers leased under long-term contracts.
IR contacts:
Galina Shilina
IR Director
+7 (495) 926 80 00 ext.11007
gshilina@fesco.com
Ekaterina Semenova
IR manager
+7 (495) 926 80 00 ext.11058
esemenova@fesco.com
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339421 30.03.2015
DGAP-News: Far Eastern Shipping Company: Results for the three-month and twelve-month periods ended December 31, 2014
| Source: EQS Group AG