DGAP-News: Far Eastern Shipping Company: Trading update for the three month and nine month periods ended September 30, 2013
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Far Eastern Shipping Company: Trading update for the three month and
nine month periods ended September 30, 2013
28.11.2013 / 09:54
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November 28, 2013
Trading update for the three month and nine month periods ended September
30, 2013
FESCO Transportation Group (MICEX-RTS: FESH) provides a trading update with
consolidated financial and operational results for the three month and
nine month periods ended September 30, 2013.
Highlights:
- Steady improvement in Company financial performance in 3Q2013 compared
to 2Q and 1Q2013. The Port Division performed particularly strongly,
recording its highest quarterly EBITDA for 3Q2013. In 9M2013, Port
Division EBITDA increased by 11.0% y-o-y driven by growing volumes of
container cargo handling
- Rail container transportation volumes were up 5.7% in 9M2013 reaching
209.8 thousand TEUs. The volume growth was above market owing to an
increased number of block trains operated by the Group and an increased
fleet of fitting platforms. Nevertheless, Rail Division results
continued to be depressed by decreased average income per railcar
across the market, particularly for gondolas, and the overall weakness
of rail market environment
- Due to mixed divisional performance in 9M2013 consolidated Group
revenue decreased by 4.8% to $849.6m and Group EBITDA decreased by
13.3% to $152.4m. Since the beginning of 2013, FESCO has acquired two
ice-class fuel efficient vessels, and chartered in another two vessels
of the same class, to strengthen positions on cabotage lines
- FESCO launched two new regular sea container services from North
America to St. Petersburg and Novorossiysk/Sochi
Group Operational Results
Port Division
In 9M2013, import container cargo throughput grew to 152.6 thousand TEUs
(up 9.1% y-o-y), export container cargo throughput grew to 118.5 thousand
TEUs (up 1.5% y-o-y), and cabotage container cargo throughput decreased by
4.8% to 78.3 thousand TEUs. Cabotage cargo throughput volumes have shown
positive trends during 2013 growing from 21.4 thousand TEUs in 1Q2013 to
26.4 thousand TEUs in 2Q2013 and 30.5 thousand TEUs in 3Q2013.
Automobiles and transportation vehicles throughput increased by 9.7%
amounting to 70.3 thousand units. Non-container cargo throughput (excluding
vehicles) declined by 37.4% to 1.5 mln tons driven by the reduction in
export volumes of ferrous metals and coke.
Rail Division
In 9M2013, rail container transportation volumes were up 5.7% y-o-y
reaching 209.8 thousand TEUs. The volume growth was above market owing to
an increased number of block trains operated by the Group and an increased
fleet of fitting platforms. In 9M2013, the number of block trains increased
by 39% y-o-y. The average number of block trains per week increased from 15
in 9M2012 to 21 in 9M2013.
Rail cargo load decreased by 17.0% to 15.3 million tons owing to Russia's
soft rail transportation market, as well as the reduction in the average
transportation speed within the RZhD network. Rail cargo turnover grew by
10.2% y-o-y due to growth in the average transportation distance.
Liner and Logistics and Shipping Divisions
In 9M2013, intermodal freighttransportation volumes rose by 18.7% y-o-y
to 179.6 thousand TEUs. Bilateral sea container trade volumes reached 273.9
thousand TEUs, an increase of 7.0% y-o-y. The Group continues to add to the
list of destinations serviced by its global network. In September and
October 2013, FESCO launched two new regular sea container services from
North America to St. Petersburg and Novorossiysk/Sochi.
In 9M2013, the volume of domestic sea container transportation declined by
9.6% y-o-y to 46.3 thousand TEUs due increased competition. To strengthen
its competitive positions, FESCO added four ice class general cargo vessels
to its shipping fleet - Pevek and Posyet were acquired in 1H2013, and FESCO
Pioneer and FESCO Partizan were chartered in during September 2013. The
first two vessels started servicing FESCO cabotage lines in the middle of
3Q2013, which drove part of our domestic sea container transportation
growth. FESCO Pioneer and FESCO Partizan will be deployed later in the
year.
As of September 30, 2013 the Group operated a fleet of 26 vessels deployed
through the FESCO sea service lines and 4 ice-breakers leased-in under
long-term contracts.
Group Financial Results
Revenue and EBITDA have continued to recover steadily each quarter during
2013 since 1Q2013's relatively weak performance. Consolidated revenue
increased from $275.3m in 1Q2013 to $292.0m in 3Q2013. Consolidated EBITDA
grew from $48.1m in 1Q2013 to $53.0m in 3Q2013.
In 9M2013, Group consolidated revenue declined by 4.8% y-o-y to $849.6m and
Group consolidated EBITDA decreased by 13.3% y-o-y to $152.4m on the back
of the challenging rail market environment in 2013. The Group's EBITDA
margin decreased by 1.8 pt to 17.9%.
EBITDA by division:
- Port Division
- In 2Q2013 and 3Q2013 the Port Division was the major contributor to
the Group EBITDA. In 3Q2013, EBITDA margin increased compared to
both 2Q2013 and 3Q2012 by 7.1pt and 2.3pt respectively. In 9M2013,
EBITDA increased by 11.0% y-o-y driven by growing volumes of
container cargo handling. EBITDA margin decreased from 51.2% in
9M2012 to 49.2% in 9M2013 due to the higher proportion of low
margin cargo in the Group's cargo mix following the consolidation
of VMTP in 1Q2012
- Rail Division
- EBITDA decreased by 44.8% from $133.2m in 9M2012 to $73.5m in
9M2013. Although FESCO has outperformed the market in the container
segment, which continued to grow during 2013, the decrease in
general cargo volumes has negatively affected the divisional
results along with the fall in average income per railcars seen
across the market, particularly for gondolas. EBITDA margin
decreased from 49.6% in 9M2012 to 37.0% in 9M2013
- Liner and Logistics Division
- EBITDA decreased by 21.0% from $33.3m in 9M2012 to $26.3m in 9M2013
owing to decreasing freight rates
- In the Shipping Division, EBITDA remains negative improving from
negative $4.1m in 2Q2013 to negative $1.5m in 3Q2013
- Bunkering
- Beginning 3Q2013, Bunkering is reported as a separate business
segment with revenue of $34.5m and EBITDA of $1.6m in 3Q2013
Pro-forma net debt decreased in 3Q2013 versus 2Q2013 ($947m versus $959m):
- Consolidated debt includes $550m of 8.00% Senior Secured Notes due 2018
and $325m of 8.75% Senior Secured Notes due 2020 in May 2013, as well
as RUB 5bn (c. $153m) of bonds, the proceeds from which were used to
refinance the Group's acquisition-related and pre-existing debt
- As of September 30, 2013, Pro-forma Net Debt / LTM adjusted EBITDA
ratio was 4.4x
Ruslan Alikhanov, FESCO President and CEO commented:
'Our Port Division demonstrated outstanding performance during the
reporting period recording a record high for quarterly EBITDA, thus
becoming the major strategic contributor to Group EBITDA. Although the
continuing weakness in the rail industry affected the Group's results, we
continue to proactively address the unfavorable trends witnessed in the
market, allowing the Group to outperform the market. In addition, we are
actively considering certain areas for growth in ancillary businesses, such
as bunkering'.
FESCO Consolidated Group Financial Performance
$ millions 1Q 2013 2Q 2013 3Q 2013 9M 2013 9M 2012 9M 2013 vs 9M(1) On adjusted basis for consolidation of port in 1Q2012, disposal of
2012
Revenue(1) 275.3 282.3 292.0 849.6 892.1 -4.8%
EBITDA(1) 48.1 51.3 53.0 152.4 175.8 -13.3%
EBITDA margin(1) 17.5% 18.2% 18.2% 17.9% 19.7% -1.8 pt
Capital 10.0 15.2 14 39.2 60.6 -35.3%
Expenditures
vessels and non-recurring expenses the 9M2013 adj. revenue decreased
by 3.5% and adj.EBITDA decreased by 29% y-o-y.
FESCO Consolidated Group Financial Position
$ millions At 30 September, 2013(2)Total borrowings include the placement USD 550m 8.00% Senior Secured
Pro-forma total Debt(2) 1,103
Cash 156
Pro-forma net Debt 947
Pro-forma net Debt/ LTM Adj. EBITDA 4.4x
Notes due 2018 and USD 325m 8.75% Senior Secured Notes due 2020 in May
2013; RUB 5bln rubl bonds in June 2013 and exclude the $149m REPO loan
against the shares of TransContainer
Divisional Financial Performance
$ millions 1Q 2013 2Q2013 3Q 2013 9M 2013 9M 2012 9M 2013 vs 9M(3) On adjusted basis for consolidation of port in 1Q2012 and non-recurring
2012
Port
Revenue(3) 46.8 51.6 51.3 149.7 129.5 +15.6%
EBITDA(3) 17.9 26.1 29.6 73.6 66.3 +11.0%
EBITDA margin(3) 38.2% 50.6% 57.7% 49.2% 51.2% -2.0 pt
Rail
Revenue 74.6 66.3 57.4 198.4 268.6 -26.1%
EBITDA 28.4 24.6 20.4 73.5 133.2 -44.8%
EBITDA margin 38.1% 37.1% 35.5% 37.0% 49.6% -12.6 pt
Liner&Logistics
Revenue 158.2 169.3 168.7 496.2 453.5 +9.4%
EBITDA 8.8 8.7 8.8 26.3 33.3 -21.0%
EBITDA margin 5.6% 5.1% 5.2% 5.3% 7.3% -2.0 pt
Shipping
Revenue(4) 17.7 11.0 14.6 43.3 109.9 -60.6%
EBITDA(4) 0.2 -4.1 -1.5 -5.3 -4.8 -
Bunkering
Revenue - 12.1 34.5 46.6 - -
EBITDA - 0.9 1.6 2.5 - -
EBITDA margin - 7.4% 4.6% 5.4% - -
expenses 9M2013 port adj.EBITDA decreased by 7% y-o-y with adj.EBITDA
margin decreased to 49%
(4) On adjusted basis for disposal of vessels and non-recurring expenses
the 9M2013 shipping adj.EBITDA decreased by $3m
FESCO operational results for 9M2013
1Q2- 2Q2- 3Q2- 9M2- 9M2- 9m2013* - excluding transportation of empty COCs
vs
013 013 013 013 012 9m2012
Intermodal freight transportation* 57,1 59,9 62,4 179, 151, +18.7%
(TEU) 95 92 05 592 362
Bilateral sea container trade (TEU) 85,3 95,8 92,6 273, 255, +7.0%
18 85 71 874 914
Domestic sea container trade (TEU) 12,8 16,0 17,3 46,2 51,1 -9.6%
61 10 93 64 96
Reefer transportation (TEU) 11,0 11,1 10,7 32,9 35,9 -8.3%
33 73 43 49 17
Ro-Ro transportation (TEU) 14,0 14,6 10,8 39,6 43,1 -8.3%
69 91 42 02 81
VMTP container throughput (TEU) 106, 117, 125, 349, 338, +3.1%
745 057 507 309 768
Import +9.1%
Export 45,9 51,5 54,9 152, 139, +1.5%
Cabotage 87 76 95 558 878 -4.8%
39,3 39,1 39,9 118, 116,
67 31 85 483 683
21,3 26,3 30,5 78,2 82,2
91 50 27 68 07
VMTP non-container cargo throughput 611 450 461 1,522 2,431 -37.4%
(excluding vehicles) (thousand tons)
Automobiles and transportation 21,5 26,3 22,3 70,2 64,0 +9.7%
vehicles throughput (units) 43 79 47 69 48
Rail container transportation 64,1 72,2 73,4 209, 198, +5.7%
(«Russkaya Troyka»and 39 30 20 789 542«Transgarant») (TEU)
Rail cargo load (million tons) 5.06 5.14 5.12 15.32 18.45 -17.0%
Rail cargo turnover (billion ton- 7.66 8.44 8.44 24.54 22.27 +10.2%
kilometers)
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 controls the Commercial Port of Vladivostok, which has throughput
capacity of 3.9 million tons for general cargo and oil products, 150,000
vehicles and over 600,000 TEUs in containers. FESCO is one of Russia's top
10 private railcar operators providing services under the Transgarant
(100%) and Russkaya Troika (50% JV with Russian Railways) brands. The Group
owns a fleet of vessels mostly deployed through own line and logistics
operations. In 2012, revenue of FESCO Group reached USD 1,197 million.
IR contacts:
Galina Shilina
Director, Corporate Communications
+7 (495) 926 80 00 ext.11007
gshilina(at)fesco.com
Ekaterina Semenova
IR manager
+7 (495) 926 80 00 ext.11058
esemenova(at)fesco.com
PR contact:
Tatiana Vishnyakova
Deputy Director, Corporate Communications
+7 (495) 926 80 00 ext.11067
tvishnyakova(at)fesco.com
End of Corporate News
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far-eastern-shipping-company-trading-update-for-the-three-month-and-nine-month-periods-ended-september-30
2013
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Datum: 28.11.2013 - 09:54 Uhr
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News-ID 321002
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