Menu
Menu
.
News and events

Trading update for the quarter ended May 31, 2013

30 May 2013
Far-Eastern Shipping Company plc (“FESCO” or the “Group”) provides a trading update with preliminary non-audited financial and operational results for the quarter ended March 31, 2013.

Group Operational Results

Port Division

  • Growth of import container cargo handling volumes (+24.2% y-o-y) and decrease in cabotage cargo volumes (-17.9% y-o-y) resulted in VMTP container cargo throughput growth by 8.2% y-o-y, reaching 106.7 thousand TEUs
  • Automobiles and transportation vehicles throughput increased by 29.5%, reaching 21.5 thousand units
  • Non-container cargo throughput (excluding vehicles) decreased by 30.8% to 610.9 thousand tons due to a reduction in metallurgical cargo throughput

Rail Division

  • Rail container transportation volumes amounted to 64.1 thousand TEUs (up 5.3%). The increase in container cargo transportation driven by an increase in railcar fleet dedicated to block train services was partially offset by an increase in average transportation distance
  • Rail cargo load decreased by 21.7% to 5.1 million tons. Rail cargo turnover grew by 6.4% reaching 7.7 billion ton-kilometers due to 36.0% growth in the average transportation distance. Marginal income was negatively affected by the decrease in average railway speed within Russian Railways’ network, as well as a 1.8% decrease in non-container railcar fleet

Liner and Logistics and Shipping Divisions

  • Intermodal freight transportation volumes rose by 34.6% y-o-y to 60.2 thousand TEUs. The growth of intermodal freight transportation was driven by increasing demand for the integrated logistical solutions provided by FESCO Group, as well as the launch of new sea and rail container services
  • Bilateral sea container trade volumes reached 65.5 thousand TEUs (+24.8% y-o-y). The growth of transportation volumes was driven by the increased tonnage of FESCO vessels. In particular, two new vessels were added to FESCO China Direct Line (FCDL), while the Korea Soviet Direct Line (KSDL) is now serviced by a vessel with larger deadweight. In February 2013, the Group launched four new sea container lines to/from Turkey: FBSS (Russia – Turkey), FBSS FE (Southeast Asia – Turkey), FBSS EU (Europe – Turkey) and FBSS MED (Mediterranean – Turkey)
  • As a result of strengthening competition, domestic sea container transportation volumes dropped by 14.6%, amounting to 12.8 thousand TEUs
  • Launch of the FESCO Ural Shuttle - a new regular container train from Vladivostok to Yekaterinburg, which commenced operations in the second half of 2012 contributed to the volume growth.

Group Financial Results

In 1Q 2013, reported total revenue increased by 4.7% y-o-y.

  • Outperformance of Liner & Logistics Division, the major contributor to Group’s revenue, and Port Division was somewhat offset by lower revenue in Rail and Shipping Divisions
  • Increase in Port Division revenue was mainly driven by consolidation of VMTP in 2Q2012

In 1Q 2013, reported EBITDA of the Group amounted to $48.4m

  • Port
    • 1Q 2013 EBITDA of $17.8m (up from $9.7m in 1Q 2012) with EBITDA margin decrease from 48.3% to 38.0% due to consolidation of VMTP with significant share of low marginal non-container cargo
  • Rail
    • The positive effect from growth of number of block trains for container transportation was offset by overall weakening of the rail market and sharp decline in transportation volumes of general cargo in particular by gondola cars, resulting in Rail EBITDA amounted to $28.4m
  • Liner & Logistics
    • The positive effect of intermodal transportation growth and bilateral sea container transportation growth resulted in EBITDA increase from negative in 1Q 2012 to $8.8m and EBITDA margin increase by 5.5%
  • Shipping
    • Shipping performance was impacted by reduction of fleet form 50 vessels in 1Q 2012 to 27 vessels in 1Q 2013 (including ice-breakers) and decline in global time-charter rates
    • Division’s business model has evolved from ship ownership and ship management to a support function for the Liner & Logistics Division.

Pro-Forma Debt

  • Pro-forma debt amounted to $1,184m following the placement $550m 8.00% Senior Secured Notes due 2018 and $325m 8.75% Senior Secured Notes due 2020 in May 2013. Pro Forma Net Debt increased to $960m. Pro Forma Net Debt / LTM adjusted EBITDA ratio was 3.5x as of March 31, 2013. The proceeds from the Notes were used for refinancing of acquisition-related debt and pre-existing debt
  • Positive effect of Senior Secured Notes placement includes improvement of capital structure and credit portfolio management

Yuriy Gilts, President of FESCO, commented:

“In the first quarter, we continued the development of our flagship container business and increased the volumes of container transportation and intermodal services. On the other hand, visible reduction of the rail market was expected by the Company, and we anticipate its recovery from the second half of 2013 onwards. Despite of the challenging macroeconomic environment, we keep positive outlook on the full-year 2013 results and do not adjust our existing plans. We will proceed with the realization of our long-term strategy, in particular growing share of containers in total cargo mix. We expect to see some visible improvements starting from the second quarter of 2013, because the first quarter of the year is traditionally a low season for container transportation. We will also continue to improve the efficiency of our business, primarily in our Port division, including staff optimization, which is taking place throughout 2013. That will help us reduce costs and boost the Group’s margins”.

FESCO Consolidated Group Financial Performance

$ millions 1Q 2013 1Q 2012 Change
Revenue 275.0 262.7 +4.7%
EBITDA 48.4 50.3 -3,8%
   Margin 17.6% 19.1% -1.5%
Capital Expenditures 10 34.3 -70.8%

FESCO Consolidated Group Financial Position

$ millions At 31 March, 2013
Pro-Forma Total Debt1) 1,184
Cash 224
Pro Forma Net Deb t 960
Net Debt/ LTM Adj. EBITDA 3.5x

(1)Total borrowings include the placement USD 550m 8.00% Senior Secured Notes due 2018 and USD 325m 8.75% Senior Secured Notes due 2020 in May 2013; exclude the $140m REPO loan against the shares of TransContainer

Divisional Financial Performance

$ millions 1Q 2013 1Q 2012 Dynamics
Port
   Revenue 46.8 20.1 +132.8%
   EBITDA 17.8 9.7 +83.5%
   EBITDA margin 38.0% 48.3% -10.3%
Rail
   Revenue 74.6 92.2 -19.7%
   EBITDA 28.4 44.1 -35.6%
   EBITDA margin 38.1% 47.5% -9.4%
Liner & Logistics
   Revenue 158.3 128.3 +23.4%
   EBITDA 8.8 -0.09
   EBITDA margin 5.5% 0% +5.5%
Shipping
   Revenue 17.7 42.2 -58.1%
   EBITDA 0.2 5.1 -96.1%
   EBITDA margin 1.1% 12.1% -11.0%


FESCO operational results for 1Q 2013

1Q 2013 1Q 2012 Dynamics
Intermodal freight transportation (TEU) 60,187 44,711 +34.6%
Bilateral sea container trade (TEU) 65,484 52,452 +24.8%
Domestic sea container trade (TEU) 12,787 14,980 -14.6%
Reefer transportation (TEU) 11,032 11,703 -5.7%
Ro-Ro transportation (TEU) 12,887 12,128 +6.3%
VMTP container throughput (TEU)
— Import
— Export
— Cabotage

45,987
39,367
21,391

37,022
35,577
26,067

+24.2%
+10.7%
-17.9%
VMTP non-container cargo throughput (excluding vehicles) (thousand tons) 610.9 882.7 30.8%
Automobiles and transportation vehicles throughput (units) 21,543 16,638 +29.5%
Rail container transportation («Russkaya Troyka» and «Transgarant») (TEU) 64,130 60,895 +5.3%
Rail cargo load (million tons) 5.1 6.5 -21.7%
Rail cargo turnover (billion ton-kilometers) 7.7 7.2 +6.4%

This information is based on our preliminary financial results for the quarter ended 31 March 2013 that are not fully comparable with our audited consolidated financial statements or unaudited interim condensed consolidated financial statements. Such information has been prepared by, and is the responsibility of, our management, and has not been audited, reviewed or verified, nor have any procedures been completed by our auditors with respect thereto, and you should not place undue reliance thereon. It is subject to confirmation in our audited consolidated financial statements for the quarter ended March 31, 2013. This business update has neither been reviewed nor reported on by FESCO’s external auditors.

CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS (PRELIMINARY UNAUDITED) FOR THE FIRST QUARTER OF 2013

FAR-EASTERN SHIPPING COMPANY PLC.
and its subsidiaries

Consolidated Interim Condensed Income Statement
For the three-month period ended 31 March 2013

USD mln

31 March 2013

31 March 2012

Revenue

275

263

Operating expenses

(193)

(179)

Gross profit before depreciation and amortization

82

84

Depreciation and amortisation

(22)

(22)

Administrative expenses

(36)

(35)

Other income and expenses, net

3

3

Profit from operating activity

27

30

Interest expense

(20)

(15)

Foreign exchange loss

(1)

-

Other finance income/(costs), net

13

4

Share of profit of equity accounted investees

9

10

Profit before income tax

28

29

Income tax expense

(7)

(8)

Profit for the period

21

21

Attributable to:

Owners of the Company

3

Non-controlling interest

21

18

Basic and diluted profit per share

USD 0.007

USD 0.007


FAR-EASTERN SHIPPING COMPANY PLC.
and its subsidiaries

Consolidated Interim Condensed Statement of Cash Flows
For the three-month period ended 31 March 2013

USD mln

31 March 2013

31 March 2012

Cash flows from operating activities

Profit for the period

21

21

Adjustments for:

Depreciation and amortisation

22

22

Profit on disposal of tangible fixed assets

(1)

-

Foreign exchange differences

1

-

Net finance costs

7

11

Share of profit of equity accounted investees

(9)

(10)

Income tax expense

7

8

Cash from operating activities before changes in working capital and provisions

48

52

Change in inventories

1

-

Change in trade and other receivables

(21)

(44)

Change in trade and other payables

11

41

Cash flows from operations before income taxes paid

39

49

Income tax paid

(7)

(13)

Cash flows from operating activities

32

36


FAR-EASTERN SHIPPING COMPANY PLC.
and its subsidiaries

Consolidated Interim Condensed Statement of Cash Flows
For the three-month period ended 31 March 2013
(Continued)

USD mln

31 March 2013

31 March 2012

Cash flows from investing activities

Expenditure on vessels under construction

-

(4)

Vessels acquired

(5)

-

Expenditure on other fixed assets

(5)

(29)

Expenditure on drydocking

-

(1)

Proceeds on disposal of fleet

6

-

Proceeds on disposal of other fixed assets

-

22

Other investments acquired

-

(1)

Acquisition of subsidiaries, net of cash acquired

-

18

Loans received

15

7

Loans issued

(14)

Finance lease received

1

1

Interest received

4

4

Net cash generated investing activities

2

17

Cash flows from financing activities

Proceeds from borrowings

9

20

Repayment of borrowings

(23)

(66)

Finance charges

(20)

(16)

Financial instruments liability paid

-

(2)

Net cash used in financing activities

(34)

(64)

Effect of exchange rate fluctuations on cash and cash equivalents

(8)

14

Net (decrease)/ increase in cash and cash equivalents

(8)

3

Cash and cash equivalents at the beginning of the period

232

232

Cash and cash equivalents at the end of the period

224

235


These materials are not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). These materials are not an offer or solicitation to purchase or subscribe for securities in the United States. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. FESCO has not registered and does not intend to register any securities in the United States or to conduct a public offering of securities in the United States.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “relevant persons”). Any securities described herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person, and does not constitute an advertisement of any securities in Russia. Any securities referred to herein have not been and will not be registered in Russia or admitted to “placement” and/or “public circulation” in Russia. Such securities are not intended for “placement” or “circulation” in Russia except and to the extent permitted by Russian law.

This press release may include "forward-looking statements". Such statements contain the words "anticipate", "believe", "intend", "estimate", "expect", "will", "may", "project", "plan" and words of similar meaning. All statements included in this press release other than statements of historical facts, including, without limitation, those regarding financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the relevant future business environment. These forward-looking statements speak only as of the date of this press release, and the Group expressly disclaims to the fullest extent permitted by law any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based

About FESCO

FESCO is one of the largest Russian port owners and operators with integrated rail and logistics businesses and primarily focused on intermodal deliveries of containerized cargo. The Group owns port, rail and shipping assets, which allow it 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, consolidated revenue of FESCO Group reached USD 1,197 million.

all publications