Far Eastern Shipping Company
Far Eastern Shipping Company: Trading update for the twelve month period ended December 31, 2013
Far Eastern Shipping Company / Key word(s): Miscellaneous March 31, 2014 Trading update for the twelve month period ended December 31, 2013 FESCO Transportation Group (MOEX: FESH) provides a trading update with the operational and audited consolidated financial results for the twelve month period ended December 31, 2013. Highlights: – Strong container business growth across Group’s divisions and service lines with intermodal transportation volumes up 17% YoY, import container handling at Vladivostok port up 10% YoY and number of block trains up 34% YoY – Non-container business remained under pressure due to overall weakness in the rail transportation market and unfavorable situation for metallurgical export from Russian Far East ports – Top line performance of the Group and Group EBITDA were negatively affected by the inherent volatility of the rail transportation market. Group EBITDA declined by 25% to $186m due to a significant drop in the Rail Division’s EBITDA which was only partially offset by growth of the Port Division’s EBITDA – Pro-forma net debt decreased from $976m as of 31-Dec-2012 to $927m as of 31-Dec-2013 Group Financial Results Group performance in FY2013 was affected by mixed results of Group’ business divisions. Sustainable improvement in the Port Division’s performance was offset by volatility and weak results of the Rail Division driven by overall weakness of general cargo rail market and the sharp decrease in gondola rates. In 2013, consolidated revenue of the Group declined by 4.8% YoY to $1,140m and consolidated EBITDA decreased by 24.7% YoY to $186m. Group EBITDA excluding one-off expenses amounted to $197m. EBITDA margin decreased by 4.3 pt to 16.3%.
(1) On adjusted basis for consolidation of Vladivostok port in 1Q2012, disposal of vessels and non-recurring expenses 2013adj. revenue decreased by 3% and adj.EBITDA decreased by 33% y-o-y. Divisional Financial Performance Port Division – EBITDA increased by 4% YoY to $89m driven by growth of container handling volumes and by consolidation of the Vladivostok Port (VMTP) starting from April 1, 2012. Port Division’s EBITDA excluding one-offs amounted to $94m. Rail Division – FESCO outperformed the market due to an increased number of block trains operated by the Group (up 34% YoY to 1,136) and an increased fleet of fitting platforms of Russkaya Troyka and Transgarant in operation (up 9% YoY) in line with the Group’s strategy to shift the focus in rail business towards containers – However, the growth in container rail transportation volumes was not enough to offset the significant decline in gondola rates and the overall weakness of general cargo rail market. As a result, Rail Division’s EBITDA decreased by 46% YoY to $90m and EBITDA margin declined by 12.1pt to 36.0% Liner and Logistics Division – EBITDA decreased by 17.5% YoY to $35.8m as a result of decreasing freight rates Shipping Division – EBITDA remained negative at $5.6m in 2013. Optimization of the fleet provided positive effect on the Division’s EBITDA, which increased from negative $4.1m in 2Q2013 to negative $0.2m in 4Q2013 – In 2013, FESCO added four ice class general cargo vessels to its shipping fleet -Pevek, Posyet, Pioneer and Primor’ye. The first two vessels started servicing FESCO cabotage lines in 3Q2013. The remaining two vessels were deployed in 1Q2014 – As of December 31, 2013 the Group operated a fleet of 24 vessels deployed through the FESCO sea service lines and 4 ice-breakers leased-in under long-term contracts. Bunkering – In 2013, bunkering business generated $84m of revenue and $3m of EBITDA
(3) On adjusted basis for consolidation of Vladivostok port in 1Q2012 and non-recurring expenses 2013 Port Division’s adj.EBITDA decreased by 4.5% y-o-y (4) On adjusted basis for disposal of vessels and non-recurring expenses 2013 Shipping Division’s adj.EBITDA decreased by$1.9m FESCO Consolidated Group Financial Position Pro-forma net debt decreased from $976m as of 31-Dec-2012 to $927m as of 31-Dec-2013: – 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, 2013, Pro-forma Net Debt / LTM adjusted EBITDA ratio was 4.7x
(2)Total borrowings include USD 550m 8.00% Senior Secured Notes due 2018 and USD 325m 8.75% Senior Secured Notes due 2020; RUB 5bln ruble bonds and exclude the $150m REPO loan secured by shares of TransContainer Ruslan Alikhanov, FESCO President and CEO commented: “In 2013, we continued progress to achieving our strategic objectives to improve our position as a leading player on the Russian transportation market. The new management team, which joined the company during this year, together with experienced FESCO staff, is now creating sound foundation for further development of the Group despite the challenging economic environment. In 2013, the Port Division became the core business of the Group and we also launched bunkering services in order to diversify our business and bring more stability”. FESCO operational results for 2013
* – 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 2013, total container throughput at the Commercial Port of Vladivostok reached 477,000 TEU, including 204,000 TEU of imported cargo. 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 16.1 thousand units of rolling stock, while “Russian Troika” operates a fleet of 1.7 thousand container platforms. FESCO has a fleet of 24 vessels, mostly deployed through own sea service lines, and 4 icebreakers leased under long-term contracts. IR contacts: Galina Shilina Ekaterina Semenova End of Corporate News 31.03.2014 Dissemination of a Corporate News, transmitted by EquityStory.RS, LLC – a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. EquityStory.RS, LLC’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
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