DGAP-News: Far Eastern Shipping Company: Trading update for

EquityStory.RS, LLC-News: Far Eastern Shipping Company / Key word(s): Miscellaneous Far Eastern Shipping Company: Trading update for the twelve month period ended December 31, 2013 31.03.2014 / 11:49 --------------------------------------------------------------------- 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%. <pre> $ millions 1Q 2013 2Q 2013 3Q 2013 4Q 2013 2013 2012 2013 vs 2012 Revenue(1) 275.3 282.3 292.0 290.4 1,140 1,197 -4.8% EBITDA(1) 48.1 51.3 53.0 33.6 186 247 -24.7% EBITDA margin(1) 17.5% 18.2% 18.2% 11.6% 16.3% 20.6% -4.3pt Capital Expenditures 10.0 15.2 14 8.3 47.5 65.8 -27.8% </pre> (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 <pre> $ millions 1Q 2013 2Q2013 3Q 2013 4Q2013 2013 2012 2013 vs 2012 Port Revenue(3) 46.8 51.6 51.3 50.4 200.1 177.9 +12.5% EBITDA(3) 17.9 26.1 29.6 15.8 89.4 85.7 +4.3% EBITDA margin(3) 38.2% 50.6% 57.7% 31.3% 44.7% 48.2% -3.5pt Rail Revenue 74.6 66.3 57.4 52.4 250.7 347.0 -27.8% EBITDA 28.4 24.6 20.4 16.9 90.3 167.8 -46.2% EBITDA margin 38.1% 37.1% 35.5% 32.3% 36.0% 48.1% -12.1pt Liner & Logistics Revenue 158.2 169.3 168.7 175.6 671.8 623 +7.8% EBITDA 8.8 8.7 8.8 9.5 35.8 43.4 -17.5% EBITDA margin 5.6% 5.1% 5.2% 5.4% 5.3% 6.9% -1.6pt Shipping Revenue(4) 17.7 11.0 14.6 22.0 65.3 141.0 -53.7% EBITDA(4) 0.2 -4.1 -1.5 -0.2 -5.6 -6.7 - Bunkering Revenue - 12.1 34.5 37.0 83.6 - - EBITDA - 0.9 1.6 0.7 3.2 - - EBITDA margin - 7.4% 4.6% 1.9% 3.8% - - </pre> (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 <pre> $ millions At 31December, 2013 Pro-forma total Debt(2) 1,118 Cash 191 Pro-forma net Debt 927 Pro-forma net Debt/ LTM Adj. EBITDA 4.7 </pre> (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 <pre> 1Q2- 2Q2- 3Q2- 4Q2- 2013 2012 2013 013 013 013 013 vs 2012 Intermodal freight 57,1 59,9 62,3 63,9 243, 208, +16.9% transportation* (TEU) 95 92 99 78 564 294 Export-import sea container trade 85,3 95,8 93,3 92,7 367, 341, +7.5% (TEU) 18 85 27 21 251 685 Domestic sea container trade 12,8 16,0 17,3 17,6 63,9 67,9 -5.9% (TEU) 61 10 93 89 53 94 Reefer transportation (TEU) 11,0 11,1 10,7 11,2 44,1 48,8 -9.5% 33 73 43 13 62 06 VMTP container throughput(TEU) 106, 117, 125, 127, 476, 456, +4.5% 745 057 507 449 758 146 Import +10.1% Export 45,9 51,5 54,9 51,8 204, 185, +2.9% Cabotage 87 76 95 39 397 721 -2.4% 39,3 39,1 39,9 44,5 163, 158, 67 31 85 21 004 391 21,3 26,3 30,5 31,0 109, 112, 91 50 27 89 357 034 VMTP non-container cargo 611 450 461 446 1,968 2,953 -33.3% throughput (excluding vehicles) (thousand tons) Automobiles and transportation 21,5 26,3 22,3 22,6 92,9 85,1 +9.2% vehicles throughput (units) 43 79 47 70 39 07 Rail container transportation 64,1 72,2 73,4 76,1 285, 264, +8.0% («RusskayaTroyka» and 39 30 20 43 932 725 «Transgarant») (TEU) Rail cargo load (million tons) 5.1 5.1 5.1 5.0 20.3 23.6 -14.0% Rail cargo turnover (billion ton- 7.7 8.4 8.4 7.8 32.3 29.7 +8.8% kilometers) </pre> * - 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 Director, Corporate Communications +7 (495) 926 80 00 ext.11007 gshilina@fesco.com Ekaterina Semenova IR manager +7 (495) 926 80 00 ext.11058 esemenova@fesco.com 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. 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