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Operational and Financial Results for FY 2015

29 April 2016

FESCO Transportation Group (MOEX: FESH) announces its operational and consolidated IFRS results for FY 2015.

Highlights

— The uncertain economic environment, foreign exchange  rate fluctuations, economic sanctions and a slowdown in domestic consumption negatively impacted transportation volumes and the financial results of the Company

— The Group is focused on strengthening relationship with direct accounts and extending presence in new business segments to generate incremental revenue and maintain profitability

— The Group has implemented the cost optimization program planned for 2015. The total benefit accounted for $55 million. The cost optimization effort continues in 2016

— Moreover, FESCO reduced capital expenditures by more than 70% to maintenance-only levels to provide the necessary support for day-to-day operations without any loss of quality and safety  

Operational Overview

— FESCO port and liner container volumes decreased due to unfavorable market conditions, as well as lower trading with foreign partners in Russia:

  ○ Container handling at VMTP decreased by 32.8% YoY, to 345.0 thousand TEU

  ○ Export-import liner volumes decreased by 27.8% YoY to 309.0 thousand TEU

  ○ Intermodal transportation decreased by 30.7% YoY to 179.3 thousand TEU

— General cargo volumes at the port decreased by 11.7% YoY to 2,027.8 thousand tons

— Rail container transportation declined by 14.3% YoY to 278.8 thousand TEU due to the low operational results from “Russkaya Troyka” which declined by 26%, while “Transgarant” container transportation declined by 5%. Rail cargo load declined by 3% YoY to 19.4 million tons.

Group Operational Results

2014  

2015

YoY Dynamics 

Intermodal freight transportation (TEU) 

258 621,0

179 300,0

(30,7%)

Export-import sea container trade (TEU)

428 137,0

309 047,0

(27,8%)

Domestic sea container trade (TEU)

65 187,0

59 862,0

(8,2%)

VMTP container throughput (TEU) 

513 481,0

345 029,0

(32,8%)

VMTP general cargo throughput (thousand tons)

2 296,6

2 027,8

(11,7%)

Rail container transportation (`000 TEU), including 

325,4

278,8

(14,3%)

             ✓ “Transgarant”

184,1

174,6

(5%)

             ✓ “Russkaya Troyka”

141,3

104,2

(26%)

Rail cargo load (million tons) 

20,0

19,4

(3,0%)

Rail cargo turnover (billion ton-kilometers) 

32,9

34,0

3,3%

Financial Overview

Group’s financial results were affected by the negative economic growth rate, decline in transportation volumes and purchasing power, as well as RUB depreciation. As a result, the Group’s consolidated revenue decreased by 38.5% YoY to $688 m. Operating expenses were reduced by 39.2% to $500 m. Gross profit before depreciation and amortization went down by 36.5% to $188 m. Administration expenses amounted to $80 m, which is 37.5% less than year before.

FESCO Consolidated Financial Position

Group total debt reduced by $206 m to $910 m, out of which $137 m are repayable within next twelve months.

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