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TransContainer net profit grew by 14.2% in 2013

Russian rail group JSC Transcontainer announced an increase of its  net profit by 14.2 percent to 5.97 billion roubles in 2013.  Company’s total revenue for the year ended 31 December 2013, increased by 7.7% to RUR 39,164 million as compared to the same period of 2012, EBITDA amounted to RUR 10,074 million, down 3.4% year on year. Company’s total assets were RUR 46,976 million, Company’s equity was RUR 31,479 million as of 31 December 2013.

The TransContainer’s key financial indicators reflect primarily the relatively weak operating and pricing environment in the rail container transportation market in Russia amid the overall economic slowdown , which were however compensated by the Company’s efforts to improve its operational efficiency as well as cost optimization. The one-off gain on disposal of a 17% stake in KedenTransService also contributed to the results.

TransContainer is the leading intermodal transportation company in Russia. In 2013 the Company accounted for approximately 47% of all rail container transportation in Russia. As of 31 December 2013, it owns and operates 26,305 flatcars and 62,367 ISO containers. TransContainer also owns a network of rail-side container terminals located at 46 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company also operates 4,641 flatcars via its joint-venture KedenTransService (excluding 500 flatcars provided by the Company to KedenTransService under operating lease agreement), as well as 19 inland rail-side terminals in Kazakhstan. The Company’s sales network is comprised of approximately 140 sales outlets across Russia, along with a presence in the CIS, Europe and Asia.

The year was challenging for both the rail transportation market and its container segment. The accelerating slowdown of the Russian economy, weaker customer demand and increasing competition amongst rail operators put transportation tariffs under pressure. Against this backdrop the Company took additional steps to enhance quality and reliability of transportation and services provided to the market.

On the operational side, the Company’s rail container transportation volumes in Russia for the year ended 31 December 2013 decreased by 2.0% to 1,454 thousand TEU compared to 1,484 thousand TEU in 2013, whilst revenue-generating transportation volumes slightly decreased by 0.7% year-on-year to 1,113 thousand TEU. Terminal handling volumes in Russia decreased by 7.6% from 1,428 thousand TEU in 2012 to 1,319 thousand TEU in the year, mainly due to a 78.7% decline in handling of medium-duty containers. At the same time, transportation volumes in Kazakhstan grew by nearly 10 times from 24 thousand TEU in 2012 to 236 thousand TEU in 2013, while handling at terminals operated by KedenTransService increased by 10.7% from 168 thousand TEU in 2012 to 186 thousand TEU in 2013.

Recent developments and outlook

In the first three months of 2014, the Russian container market grew by approximately 9% year on year, according to the preliminary data. To a significant extent this growth is attributable to the low base of the previous year. The Russian rouble devaluation, which started in the beginning of 2014, supported domestic and export container transportation, but growth in these segments was partially offset by the negative impact of the weaker rouble on container imports.

Since the overall economic environment is very uncertain with Russia’s economy demonstrating weak performance in the first quarter of 2014 and the market expecting further economic slowdown in the country, the Company’s management believes that the growth in the Russian rail container market still has to prove its resilience despite the strong first quarter results. Currently, the Company’s management expects the rail container market to demonstrate middle single-digit growth rates for the full year of 2014, subject to any external effects.

Given the weaker demand for rail cargo transportation, increasing levels of competition in the container segment may put operator tariffs under pressure. As well as looking to continue with its marketing efforts and making improvements to the quality of service, the Company’s management will also review its pricing policy as costs are optimised and operating efficiency continues to improve further.


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