In 2013, according to preliminary data, Georgian Railways’s net income from railway freight transportation and associated activities increased with GEL 28m (approx. EUR 11.6m), though transported volumes of cargo went down (the decrease was mainly caused by the decrease in dry cargo transportation by 17.4 %, which in its turn was due to the decrease in grain, construction freight and ore transportation). The company underlines that the growth has taken place against a reduction (on average by 15-20%) of carried goods in the post-Soviet space and in the ports of the Caspian and Black Seas.
In the company’s management declaration from October 2013 it is stated that the net income amounted to GEL 76.9 million in the nine month period ended 30 September 2013, compared to GEL 59.1 million in the same period of the previous year.
Freight revenue increased due to improved transportation performance in both dry and liquid cargo and increased transportation of high yielding cargoes (grain, sugar etc.). This caused the increase in transportation revenue as well as other freight revenues. Due to the tariff setting independence of the company, it was able to increase tariffs on freight handling services which also contributed to the increase in revenue from freight handling operations. In May, 2013 tariffs for the freight forwarding services of the subsidiary company were also increased, which in combination with the improved cargo transportation resulted in increased revenue stream from this direction.
Transportation volumes in October 2013 were the highest up to now, with November levels quite high as well. This gives expectations for continued good performance of the company in the remaining quarter of the year. Near completion of Batumi intermodal station, designed to increase container transportation through railway as well as the company’s plans on entering ferry business on the Black Sea as a minority shareholder, are expected to add to the effect of cargo growth in future periods.
The slow-down of the capital construction projects resulted in additional increase of cash balances of the company. The pace of Modernization project is slowed down, while Tbilisi Bypass is delayed. Tbilisi Bypass project should have already been completed in summer 2013. However, the contractor was not able to meet his obligations and the project is currently suspended. Georgian Railway has hired a consultant to make the project more feasible for the company and as the studies of the project are carried out, the final decision is yet to be made. However, the expectation is for the delay by up to 3 years. This delay should not affect company in any way from the point of its operations, as the project carries more of a municipal value rather than improvement in operations. Thus the delay has a positive effect on the liquidity of the company.
Passenger revenues increased by 0.8 per cent (GEL 0.1 million) in the nine month period ended 30 September 2013 compared to the same period of the previous year. In the nine month period of 2013, GR transported 5.2 per cent less passengers than in the same period of 2012. The disproportion between the change in passenger number and change in revenues is caused by the increased share of seats sold with higher tariffs.
Source* Georgian Railways, RNS – The company news service from the London Stock Exchange