EquityStory.RS, LLC-News: Far Eastern Shipping Company / Key word(s):
Miscellaneous
Far Eastern Shipping Company: Results for the six-month period ended
June 30, 2015
28.08.2015 / 12:30
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August 28, 2015
Results for the six-month period ended June 30, 2015
FESCO Transportation Group (MOEX: FESH) today announces its operational and
consolidated financial results as per IFRS for six-month period ended June
30, 2015.
1H 2015 Highlights
- FESCO increased its market share on the export-import sea container
service lines through the Russian Far East to 45.9%.
- FESCO remains the largest port operator in the Far East basin by import
container handling with market share of 34.7%.
- The macroeconomic environment put pressure on FESCO container volumes.
In order to address the market headwinds, the Group continues to
successfully implement its cost-cutting initiatives with targeted
effect of approximately $40 mln in 2015.
- Group EBITDA margin increased by 2.3 pp YoY in 1H2015 as cost
reductions mitigated the impact of the decline in revenue.
- CAPEX was down from $36.3m in 1H2014 to $9.1m in 1H2015.
Operational overview
- In 1H2015, FESCO Rail Division was outperforming the market both in
container and general cargo segments:
- Rail cargo load increased by 1.0% YoY to 10.0 million tons (versus
1.5% YoY market decline)
- Rail container transportation decreased by 2.3% YoY to 143.9
thousand TEU (versus 9% YoY market drop).
- FESCO port and liner container volumes were down in line with negative
market trend:
- Container handling at VMTP was down by 28% YoY to 174.6 thousand
TEU
- Export-import liner volumes were down by 16,8% YoY to 168.4
thousand TEU
- Intermodal transportation was down by 8,9% YoY to 107 thousand TEU.
- General cargo volumes at the port decreased by 17.2% YoY to 1,055
thousand tons in 1H2015.
FESCO operational results for 1H 2015
<pre>
1H 2014 1H 2015 Dynamics
Intermodal freight transportation (TEU) 117,474 107,042 -8,9%
Export-import sea container trade (TEU) 202,542 168,436 -16.8%
Domestic sea container trade (TEU) 28,154 26,930 -4.3%
VMTP container throughput(TEU) 242,612 174,570 -28.0%
VMTP non-container cargo throughput (excluding 1,275 1,055 -17.2%
vehicles) (thousand tons)
Rail container transportation 147.3 143.9 -2.3%
(«RusskayaTroyka» and «Transgarant») ('000
TEU)
Rail cargo load (million tons) 9.9 10.0 +1.0%
Rail cargo turnover (billion ton-kilometres) 15.4 19.5 +26.6%
</pre>
Financial overview
Group's financial results were affected by declining transportation volumes
and RUB depreciation, but cost-control measures and conversion of
export-import tariffs in port from RUB to USD support the profitability.
- In 1H2015, Group's consolidated revenue decreased by 25.3% YoY to
$383.4m. Consolidated EBITDA decreased by 13.4% to $62.7m.
- Group EBITDA margin increased by 2.3 pp YoY in 1H2015 as cost
reductions mitigated the impact of the decline in revenue.
- In RUB terms revenue in 1H2015 was up by 23.2% YoY to RUB 22,103m,
while EBITDA was up by 44.6% YoY to RUB 3,663m.
- CAPEX was cut back close to maintenance level and amounted to $9.1m in
1H2015 (down by 74.9% YoY).
Group Financial Results
<pre>
$ million 1H 2014 1H 2015 YoY Dynamics
Revenue 513.1 383.4 -25.3%
EBITDA 72.4 62.7 -13.4%
EBITDA margin 14.1% 16.4% +2.3 pp
CAPEX 36.3 9.1 -74.9%
RUB million 1H 2014 1H 2015 YoY Dynamics
Revenue 17,947.0 22,102.6 23,2%
EBITDA1 2,534.0 3,663.3 44,6%
</pre>
Divisional Performance
Port Division
- Container throughput in 1H2015 decreased by 28.0% YoY to 174,570 TEU in
line with negative market trends.
- General cargo volumes decreased by 17.2% YoY in 1H2015 to 1,055
thousand tons.
- Division's revenue decreased by 34.0% YoY in 1H2015 to $59,4m on the
back of weakening volumes. EBITDA declined by 21.9% YoY to $31.7m.
EBITDA margin improved by 8.3 pp up to 53.4% due to realization of
cost-cutting initiatives.
Rail Division
- Rail container transportation by Transgarant and Russkaya Troyka
decreased by 2.3% YoY to 143.9 thousand TEU in 1H2015. Despite the
decline in volumes, FESCO Rail Division continued to perform better
than the market, which dropped by 9.0% YoY in 1H2015.
- Transgarant rail cargo load increased by 1.0% YoY to 10.0 million tons
outperforming the market, which continued to stay in the negative
territory (1.5% YoY decline in 1H2015).
- Rail Division's revenue in 1H2015 amounted to $58.0m, a decrease of
31.8% YoY due to the effect of RUB devaluation.
- Unfavourable market trends in combination with RUB devaluation resulted
in EBITDA decreased by 53.9% YoY to $11.3m in 1H2015. EBITDA margin
amounted to 19.5%, down by 9.3 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 1H2015,
export-import sea container volumes decreased by 16.8% YoY to 168.4
thousand TEU, while intermodal container transportation decreased by
8.9% YoY to 107.0 thousand TEU.
- Domestic sea container transportation decreased by 4.3% YoY in 1H2015
to 26.9 thousand TEU.
- The decrease of volumes and negative dynamics of global freight rates
resulted in the Division's revenue and EBITDA decrease. In 1H2015,
revenue decreased by 34.9% YoY to $198.4m, while EBITDA decreased by
13.8% YoY to $8.1m.
Shipping Division
- In 1H2015, Shipping Division's revenue was up by 44.7% YoY to $48,2m.
It was driven by an increase of more profitable cargo transportation in
Arctic basin and increase in international freight tariffs especially
for container ships.
- The Division's EBITDA was up almost five times to $15.9m. EBITDA margin
increased from 8.7% in 1H2014 to 33.0% in 1H2015 positively impacted by
fleet renewal and cost-cutting program.
Bunkering
- Bunkering revenue increased by 14.0% YoY in 1H2015 to $80.8m due to
volumes growth, which was partially offset by the decrease in oil
prices.
- The Division's EBITDA amounted to $4.6m in 1H2015. EBITDA margin was
impacted by negative trend in oil prices and decreased by 3.0 pp to
5.7%.
<pre>
$ millions 1H 2014 1H 2015 Dynamics
Port
Revenue 90.0 59.4 -34.0%
EBITDA 40.6 31.7 -21.9%
EBITDA margin 45.1% 53.4% +8.3 pp
Rail
Revenue 85.0 58.0 -31.8%
EBITDA2 24.5 11.3 -53.9%
EBITDA margin 28.8% 19.5% -9.3 pp
Liner & Logistics
Revenue 304.8 198.4 -34.9%
EBITDA2 9.4 8.1 -13.8%
EBITDA margin 3.1% 4.1% +1.0 pp
Shipping
Revenue 33.3 48.2 +44.7%
EBITDA2 2.9 15.9 +448.3%
EBITDA margin 8.7% 33.0% +24.3 pp
Bunkering
Revenue 70.9 80.8 +14.0%
EBITDA2 6.2 4.6 -25.8%
EBITDA margin 8.7% 5.7% -3.0 pp
</pre>
FESCO Consolidated Group Financial Position
- Pro-forma total debt amounted to $873m as of 30-Jun-2015.
- Pro-forma net debt amounted to $832.7m as of 30-Jun-2015.
- As of Jun 30, 2015, Pro-forma Net Debt / LTM adjusted EBITDA ratio was
4.97Ñ
.
Liability management initiatives
- On March 26, 2015, holders of FESCO 5 bln RUB bonds series BO-02
approved the maturity extension to November, 2017 with 40% issue par
value redemption in 2016.
- On March 31, 2015, FESCO commenced a cash tender offer targeting its
2018 Notes and 2020 Notes and a public purchase offer for up to RUB
4bln in Rouble bonds series BO-02 at fixed price of 80%.
- The Company purchased $128.9m par value 2018 Notes and $91.1m par value
2020 Notes. The transaction was settled on May 14, 2015. In addition,
FESCO repurchased 2.992 mln RUB par value bonds series BO-02.
- The buyback transactions were financed by combination of own funds,
bank loan, public debt and by the company's ultimate controlling party.
FESCO placed RUB 5.002 million RUB bonds series BO-01 due 2018. The
Group has also signed a repurchase (REPO) agreement for USD 44m
financing secured by its Senior Secured Notes with an international
bank.
Reflection in IFRS Statements
- As result of tender offer Eurobond buybacks FESCO decreased its debt by
$220m for total consideration of $111m.
- Under IFRSs requirements the resulting gain of $109m should have been
recognised in the statement of profit and loss during the reporting
period.
- The buyback was partially financed by the loan received from the bank.
In accordance with loan agreement the recognition of the above gain
should be deferred until the loan repayment in 2018 when the bonds
provided as collateral to the bank are returned to the Group.
- The recognition of the financial result of buyback as a deferred gain
within long-term liabilities rather than gain within profit and loss is
not stipulated by IFRSs and has resulted in technical by nature
qualified conclusion in the Auditor's report.
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 one of the major 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.
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390303 28.08.2015
DGAP-News: Far Eastern Shipping Company: Results for the six-month period ended June 30, 2015
| Source: EQS Group AG