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

26 November 2015
FESCO Transportation Group (MOEX: FESH) announces its unaudited operational and consolidated IFRS results for the nine-month period ended September 30, 2015.


  • 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 vehicles) (thousand tons) 1,786 1,536 -14.0%
Rail container transportation («RusskayaTroyka» and «Transgarant») (`000 TEU) 236.5 209.6 -11.4%
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&bnsp;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%

RUB million 9M 2014 9M 2015 YoY Dynamics  
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 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 48.1% 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
   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.

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