DGAP-News: Far Eastern Shipping Company: Operational and Financial Results for the Nine-Month Period Ended September 30, 2015 (news with additional features)


EquityStory.RS, LLC-News: Far Eastern Shipping Company / Key word(s):
9-month figures
Far Eastern Shipping Company: Operational and Financial Results for
the Nine-Month Period Ended September 30, 2015 (news with additional
features)

25.11.2015 / 16:10

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November 25, 2015 

Operational and Financial Results for the Nine-Month Period Ended September
30, 2015

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       1,786     1,536     -14.0%
vehicles) (thousand tons)

Rail container transportation                  236.5     209.6     -11.4%
(«RusskayaTroyka» and «Transgarant») ('000
TEU)

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 cost-control measures support the profitability

  - 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 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%

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                      48.2%         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, 2015

  - Pro-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.



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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Additional features:

Document: http://n.equitystory.com/c/fncls.ssp?u=BOTPXDGOYN
Document title: Far Eastern Shipping Company Operational and Financial
Results for the Nine-Month Period Ended September 30, 2015

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