Share Price
[Delayed by 20 minutes]
 

Global Reach

Explore our geographical footprint
View map >

Global Reach
28 Nov 2017

Results for the third quarter and nine months ended 30 September 2017

RNS Number : 6929X

PJSC Transcontainer

28 November 2017

 

FOR IMMEDIATE RELEASE   

28 November 2017

 

PJSC TransContainer

 

Results for the third quarter and nine months ended 30 September 2017

 

PJSC "TransContainer" ("TransContainer" or the "Company" together with its consolidated subsidiaries) today publishes its management report together with the unaudited interim condensed consolidated financial statements for the third quarter and nine months ended 30 September 2017. The financial statements presented in this announcement have been prepared in accordance with the International Financial Reporting Standards ("IFRS").

 

Operating and financial review

 

Summary

TransContainer is the leading intermodal Transportation equipment for shipping cargo via various means of transport. Containers are durable enough for repeated use and can be stacked. Containers are divided into medium-duty (three- and five-tonne), which conform to former Soviet Union standards and are still used for shipments in Russia and the CIS, and ISO (20- and 40-foot) containers, which are used for Russian and international shipments. The universal standard unit TEU (twenty-foot equivalent unit) was introduced to measure transport flow volumes.
container
transportation company in Russia. As at 30 September 2017, it owned and leased 24,235 flatcars and 71,075 ISO containers. TransContainer also owns a network of rail-side container terminals, located at 42 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company's joint venture JSC KedenTransService ("KedenTransService", or "KDTS") also operates 19 inland rail-side terminals in Kazakhstan. TransContainer's sales network comprises 107 sales outlets in Russia, along with additional outlets across the CIS, Europe and Asia.

 

In the third quarter of 2017, Russia's container market continued to demonstrate a strong and robust growth of 19.2% year-on-year, mainly driven by an increase in import and Freight passing from one country to another through a third country. Whether cargo is permitted to transit a certain country and under what terms is subject to trade agreements and treaties between countries. Direct transit is when foreign goods are shipped under tariff protection, without holding at a customs warehouse; indirect transit is when goods arrive at customs warehouses and are then transported abroad.
transit
transportation.

 

For the nine months of 2017, the Russian rail container market grew by 19.6% year-on-year to 2,831 thousand TEU. In terms of segment breakdown for the nine month period, domestic transportation volumes grew by 7.3% year-on-year, export transportation increased by 20.5% year-on-year, while import and transit transportation volumes surged by 36.7% and 67.5%, respectively.

 

Amid the favorable market environment, the Company's revenue-generating transportation volumes increased by 22.6% year-on-year to 376 thousand TEU in the third quarter and by 22.9% year-on-year to 1,057 thousand TEU for the first nine months of the reporting year. As a result, the Company's adjusted revenue increased by 29.7% year-on-year in the third quarter and by 30.1% year-on-year for the first nine months of 2017, respectively.

 

At the same time adjusted operating expenses grew by just 2.5% year-on-year in the reporting quarter and by 10.2% year-on-year for the nine month period. This was largely driven by an increase in transportation volumes by the Company's assets, which grew by 16.0% and 17.7%, respectively. The Company managed to keep under control its key expense items such as For containers - transporting an empty container on a flatcar, for flatcars – a flatcar run without container(s) or any non-container cargo.
empty run
costs, salaries and administrative expenses, as a result of improved fleet management, as well as The process of organising a chain of delivery, and managing that chain in the broadest sense. This chain may encompass both deliveries of raw materials needed for production and management of material resources at an enterprise, delivery to warehouses and distribution centres, sorting, handling, and final distribution at the points of consumption. In the context of transportation services, the main service is that of delivering cargo across a delivery route.
logistics
and optimisation measures taken at the Company's terminals.

 

As a result, the EBITDA margin increased to the record 50.3% in the third quarter of 2017 and to 43.7% for the first nine months of 2017, while the net profit margin improved to 31.6% and 25.4%, respectively.

 

The summary of the Company's key financial metrics is presented in the table below:

 

9M

2017

9M 2016

Year-on-year change

3Q 2017

3Q 2016

Year-on-year change

RUB mln

Percent

RUB mln

Percent

Total revenue

48,242

36,900

+11,342

+30.7%

17,569

13,357

+4,212

+31.5%

Adjusted revenue

20,427

15,695

+4,732

+30.1%

7,442

5,738

+1,704

+29.7%

Adjusted expenses

14,697

13,334

+1,363

+10.2%

4,861

4,744

+134

+2.5%

EBITDA

8,936

5,298

+3,638

+68.7%

3,744

2,106

+1,638

+77.8%

Adjusted EBITDA margin

43.7%

33.8%

50.3%

36.7%

Profit for the period

5,186

2,641

+2,545

+96.4%

2,350

1,159

+1,174

+102.8%

Adjusted net profit margin

25.4%

16.8%

+8.6%

31.6%

20.2%

+11.4%

 

As at 30 September 2017, the Company's total debt was RUB 6,267 million with net debt of only RUB 1,217 million.

 

On the back of the strong customer demand for transportation services, capital expenditure for the nine months ended 30 September 2017 increased 2.6 times year-on-year and amounted to RUB 3,483 million, which were spent on the acquisition of containers, flatcars and investments in terminal infrastructure. All capital expenditure during the reporting period was financed by the Company's own cash flow.

 

Recent developments and outlook

In October and November of 2017, the Russian rail container market continued its robust growth. For the eleven months of 2017, the market is expected to expand by approximately 19% year-on-year, exceeding the Company's initial expectations.

 

To facilitate faster-than expected market growth, the Company has been investing in acquisition of new flatcars and containers, as well as making efforts to further optimise the business in order to improve its position in key segments of the container market. Along with acquisitions of terminal assets made or agreed on during the third quarter, in September of 2017, the Company's Board of Directors approved to spin off the Company's tank-container transportation business into a wholly owned subsidiary.

 

As the Company believes that the long-term growth potential of the rail container transportation market is driven by ongoing rail cargo The use of containers for cargo transportation, supply and storage.
containerisation
, TransContainer will continue to focus on further business optimisation, improving management efficiency, asset utilisation and the quality of customer service in order to increase the attractiveness of container transportation for existing and potential clients.

 

Key operating results

In the reporting quarter, container volumes transported by the Company's transportation assets (including provision of own containers to third-party flatcars) increased by 16.0% year-on-year to 456.7 thousand TEU. This was mainly as a result of the continued growth in international transportation, which was up 34.8% year-on-year, especially in import and transit segments, which grew by 34.0% and 92.3%, respectively.

 

Container transportation by TransContainer's assets in 3Q 2017 (ISO Loaded + Empty), 000' TEU

3Q 2017

3Q 2016

Change

000' TEU

Percent

Domestic Routes

229.3

225.0

+4.3

+1.9%

Export

105.2

85.7

+19.5

+22.8%

Import

86.2

64.3

+21.9

+34.0%

Transit

36.0

18.7

+17.3

+92.3%

All Routes

456.7

393.8

+63.0

+16.0%

 

Container volumes transported by the Company's A specialised type of rolling stock designed to carry ISO containers.
flatcar
fleet in the third quarter of 2017 increased by 19.0% year-on-year to 430.4 thousand TEU from 361.6 thousand TEU a year earlier. The Company's revenue-generating
[1]container transportation volumes in Russia amounted to 376.1 thousand TEU in the third quarter of 2017, up 22.6% year-on-year.

For the nine months of 2017, container volumes transported by the Company's flatcar and container fleet, as described above, grew by 17.7% year-on-year to 1,316.8 thousand TEU, mainly as a result of an increase in import and export transportation.

 

Container transportation by TransContainer's assets for 9 months 2017 (ISO Loaded + Empty), 000' TEU

9M 2017

9M 2016

Change

000' TEU

Percent

Domestic Routes

669.0

637.1

+31.9

+5.0%

Export

320.8

262.5

+58.3

+22.2%

Import

237.5

169.2

+68.4

+40.4%

Transit

89.4

49.7

+39.7

+79.9%

All Routes

1,316.8

1,118.5

+198.3

+17.7%

 

Container volumes transported by the Company's flatcar fleet in the nine months of 2017 increased by 19.1% year-on-year to 1,230.5 thousand TEU from 1,032.8 thousand TEU a year earlier. The Company's revenue-generating container transportation volumes in Russia amounted to 1,056.5 thousand TEU in the nine months of 2017, up 22.9% year-on-year.

 

In the third quarter of 2017, the Company's throughput in the Russian rail A place equipped for the trans-shipment and storage of containers. A container terminal
typically includes one or more container yards. Rail-based container terminals are equipped with spur tracks for loading and unloading containers to/from railroad platforms (cars).
container terminal
network increased by 6.4% to 339 thousand TEU, compared to 319 thousand TEU for the same period of 2016. For the nine months of 2017, the Company's container terminal throughput was up 7.1% and amounted to 961 thousand TEU compared to 897 thousand TEU for the nine months of 2016.

 

The Company's container handling lagged the level of growth witnessed in the container transportation market as a result of a higher share of the export and transit transportation market, as well as due to the restrictions applied to some of the Company's terminals in Moscow, in line with the intention of Moscow government to reduce the number of A form of payment for sea transportation of cargo, or the use of a ship for a certain period of time. Freight payment is determined by the volume of cargo delivered to the destination
or by the volume of cargo loaded onto the ship.
freight
terminals located in the central part of the city.

 

Starting from 30 September 2017, the Company has changed the manner in which it presents the empty run ratio for flatcars and containers. The new formula is based on average container*kilometers rather than average kilometers. This approach provides for more accurate metrics reflecting both distances and volumes relevant to empty transportation.

 

The comparison of the new metrics with the old ones is presented below:

 

Empty run ratio

2014

2015

2016

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

2Q 17

3Q 17

Containers (new)

17.6%

21.7%

21.5%

20.9%

22.2%

22.0%

20.9%

22.6%

17.4%

16.7%

Container (old)

28.8%

31.2%

32.0%

29.3%

32.3%

34.0%

32.1%

31.8%

29.7%

30.2%

Flatcars (new)

2.2%

2.0%

2.7%

2.3%

1.9%

3.1%

3.5%

3.6%

3.7%

4.1%

Flatcar (old)

7.2%

7.4%

8.3%

8.2%

6.4%

8.8%

9.5%

9.2%

10.8%

12.1%

 

In the third quarter of 2017, container empty run ratio improved from 22.0% to 16.7% due to the optimisation of sales and operations planning and tariffs. Empty run ratio for flatcars grew from 3.1% to 4.1% due to persistentmisbalances in container flows in the Far East region, caused by the fast-growing transit and import flows from China.

 

3Q 2017

3Q 2016

9M 2017

9M 2016

Turnover of containers, days

38.3

32.7

38.2

35.6

Turnover of flatcars, days

12.0

13.5

12.0

13.9

Empty run[2] for containers, %

16.7%

22.0%

18.7%

21.7%

Empty run[3] for flatcars, %

 

4.1%

3.1%

3.8%

2.5%

 

The turnover of flatcars improved from 13.9 days for the nine months of 2016 to 12.0 days for the same period of 2017. The turnover of containers increased from 35.6 to 38.2 days, respectively. This was a result of the Company's policy of arranging container stocks in key loading hubs and in clients' freight yards in order to reduce the number of flatcars standing idle.

 

Description of Key Consolidated Statement of Comprehensive Income Items

 

The following table sets out the Company's key results for the third quarter and nine months ended 30 September 2017 and 2016.

 

Summary of the Company's key results for the third quarter and nine months ended 30 September 2017 and 2016, respectively:

 

RUB million

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln                %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln                %

Revenue

48,242

36,900

+11,342

+30.7%

17,569

13,357

+4,212

+31.5%

Other operating income

445

511

-66

-12.9%

219

168

+51

+30.4%

Operating expenses

-42,512

-34,539

-7,973

+23.1%

-14,988

-12,363

-2,642

+21.2%

Operating profit

6,175

2,872

+3,303

+115.0%

2,800

1,162

+1,638

+141.0%

Interest expense

-491

-290

-201

+69.3%

-141

-77

-64

+83.1%

Interest income

247

190

+57

+30.0%

66

103

-37

-35.9%

Foreign exchange gain, net

-4

-167

+163

-97.6%

-29

-31

+2

-6.5%

Share of result of associates and JVs

493

545

-52

-9.5%

189

225

-36

-16.0%

Other financial results, net

48

0

+48

41

0

+41

Profit before income tax

6,468

3,150

+3,318

+105.3%

2,926

1,382

+1,544

+111.7%

Income tax expense

-1,282

-509

-773

+151.9%

-576

-223

-353

+158.3%

Profit for the period

5,186

2,641

+2,545

+96.4%

2,350

1,159

+1,191

+102.8%

Other comprehensive income/loss

-217

-482

+265

-55.0%

-229

-49

-180

+367.3%

Remeasurements and other reserves for post-employment benefit plans

-33

-84

+51

-60.7%

-17

-38

+21

-55.3%

Exchange differences on translating foreign operations (TRCN)

9

-39

+48

-123.1%

3

5

-2

-40.0%

Exchange differences on translating foreign operations (Associates & JV)

-193

-359

+166

-46.2%

0

-16

+16

-100.0%

0

0

+0

-215

0

-215

Total comprehensive income for the period

4,969

2,159

+2,810

+130.2%

2,121

1,110

+1,011

+91.1%

Attributable to:

Equity holders of the parent

0

2,159

-2,159

-100.0%

0

1,180

-1,180

-100.0%

Non-controlling interest

0

0

+0

0

0

+0

 

Adjustments and additional financial information

The majority of the Company's services are provided with the use of third-party services. Accordingly, third-party charges for such services are presented within the Company's revenues and expenses. Such third-party charges include the value of rail infrastructure tariffs and the charges of the Company's other subcontractors and contracted partners involved in the process of providing the Company's services.

 

Third-party charges other than ones related to integrated freight forwarding and logistics services are presented within revenues as a separate line item "Cargo transportation and handling services with involvement of third parties".

 

All third-party charges, including ones related to integrated freight forwarding and logistics services, are presented within expenses as "Third-party charges related to principal activities".

 

Summary of third-party charges included in TransContainer's revenues

 

Item

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln            %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln            %

3rd-party charges related to integrated freight forwarding and logistics

 

25,773

17,582

+8,191

+46.6%

9,921

6,404

+3,517

+54.9%

Cargo transportation and handling services with involvement of third parties

2,042

3,623

-1,581

-43.6%

206

1,215

-1,009

-83.0%

Third-party charges related to principal activities

27,815

21,205

+6,610

+31.2%

10,127

7,619

+2,508

+32.9%

 

In order to enhance analysis, we apply adjustments to the components of the Company's revenues and expenses to derive the values that are net of the charges of third parties involved in providing the Company's services.

 

Total revenue adjustments

 

Item

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln            %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln            %

Total revenue

48,242

36,900

+11,342

+30.7%

17,569

13,357

+4,212

+31.5%

Third-party charges related to principal activities

-27,815

-21,205

-6,610

+31.2%

-10,127

-7,619

-2,508

+32.9%

Adjusted Revenue

20,427

15,695

+4,732

+30.1%

7,442

5,738

+1,704

+29.7%

 

Integrated freight forwarding and logistics services revenue adjustment

 

Item

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln            %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln            %

Integrated freight forwarding and logistics services

 

40,990

27,453

+13,537

+49.3%

15,929

10,096

+5,833

+57.8%

3rd-party charges related to integrated freight forwarding and logistics

-25,773

-17,582

-8,191

+46.6%

-9,921

-6,404

-3,517

+54.9%

Adjusted integrated freight forwarding and logistics services

15,217

9,871

+5,346

+54.2%

6,008

3,692

+2,316

+62.7%

 

Operating expenses adjustment

 

Item

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln            %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln          %

Total operating expenses

42,512

34,539

+7,973

+23.1%

14,988

12,363

+2,625

+21.2%

Third-party charges related to principal activities

-27,815

-21,205

-6,610

+31.2%

-10,127

-7,619

-2,508

+32.9%

Adjusted Operating Expenses

14,697

13,334

+1,363

+10.2%

4,861

4,744

+117

+2.5%

 

Adjusted Revenue, Adjusted Operating Expenses, EBITDA, Adjusted EBITDA Margin and Adjusted Operating Margin are not recognised under the IFRS as measures of financial performance, but are calculated on the basis of the IFRS figures and are presented as supplemental indicators of the Company's operating performance. These supplemental measures have limitations as analytical tools, and investors should not consider any of them in isolation, or any combination of them, as a substitute for analysis of our results as reported under the IFRS.

 

Non-IFRS metrics used in the analysis

 

RUB million

9M 2017

 

9M 2016

 

Year-on-year change

RUB mln            %

3Q 2017

 

3Q 2016

 

Year-on-year change

RUB mln            %

Revenue

48,242

36,900

+11,342

+30.7%

17,569

13,357

+4,212

+31.5%

Adjusted Revenue¹

20,427

15,695

+4,732

+30.1%

7,442

5,738

+1,704

+29.7%

Adjusted operating expenses²

14,697

13,334

+1,363

+10.2%

4,861

4,744

+117

+2.5%

EBITDA³

8,936

5,298

+3,638

+68.7%

3,744

2,106

+1,638

+77.8%

Adjusted EBITDA margin4

43.7%

33.8%

50.3%

36.7%

Profit for the period

5,186

2,641

+2,545

+96.4%

2,350

1,159

+1,191

+102.8%

Net Income Margin

25.4%

16.8%

8.6%

31.6%

20.2%

11.4%

Total debt

6,267

8,937

-2,670

-29.9%

6,267

8,937

-2,670

-29.9%

Net debt5

1,217

-310

+1,527

-492.6%

1,217

-310

+1,527

-492.6%

LTM EBITDA

10,737

7,067

+3,670

+51.9%

8,936

5,298

+3,638

+68.7%

Net debt/LTM EBITDA

0.11

-0.04

0.14

-0.06

 

Adjusted Revenue is calculated as total revenue less cost of integrated freight forwarding and logistics services.

2 Adjusted Operating Expenses are calculated as operating expenses less cost of integrated freight forwarding and logistics services.

3 EBITDA is defined as profit for the period before income tax, interest expense and depreciation and amortisation.

4 Adjusted EBITDA Margin is defined as EBITDA divided by Adjusted Revenue.

5 Net Debt is calculated as long-term debt, finance lease obligations, short-term debt and current portion of long-term debt less cash and cash equivalents and short-term investments.

 

Revenue

The following table sets out the breakdown of total revenue for the third quarter and nine months ended 30 September 2017 and 2016, respectively.

 

Revenue breakdown

RUB million

9M 2017

9M 2016

Year-on-year change

RUB mln            %

3Q 2017

3Q 2016

Year-on-year change

RUB mln            %

 

Integrated freight forwarding and logistics services

40,990

27,453

+13,537

+49.3%

15,929

10,096

+5,833

+57.8%

Rail-based container shipping services

1,992

3,057

-1,065

-34.8%

344

1,042

-698

-67.0%

Cargo transportation and handling services with involvement of third parties

2,042

3,623

-1,581

-43.6%

206

1,215

-1,009

-83.0%

Terminal services, bonded warehousing services and agency fees

 

2,588

1,870

+718

+38.4%

964

681

+283

+41.6%

Truck deliveries

376

657

-281

-42.8%

30

238

-208

-87.4%

Other

254

240

+14

+5.8%

96

85

+11

+12.9%

Total revenue

48,242

36,900

+11,342

+30.7%

17,569

13,357

+4,212

+31.5%

 

Total revenue increased by RUB 11,342 million, or 30.7% year-on-year, to RUB 48,242 million for the nine months ended 30 September 2017, from RUB 36,900 million in the corresponding period of 2016. In the third quarter of 2017, total revenue increased by 31.5% year-on-year to RUB 17,569 million. This primarily resulted from an increase in transportation volumes by the Company's assets, as well as terminal handling volumes on the back of the growing rail container transportation market.

 

The following table sets out the components of adjusted revenue and their relative contribution to adjusted revenue for the nine months ended 30 September 2017 and 2016, respectively.

 

9M 2017

9M 2016

Year-on-year change

RUB mln

share, %

RUB mln

share, %

RUB mln

Percent

Adjusted integrated freight forwarding and logistics services

15,217

74.5%

9,871

62.9%

+5,346

+54.2%

Rail-based container shipping services

1,992

9.8%

3,057

19.5%

-1,065

-34.8%

Terminal services, bonded warehousing services and agency fees

2,588

12.7%

1,870

11.9%

+718

+38.4%

Truck deliveries

376

1.8%

657

4.2%

-281

-42.8%

Other revenues

254

1.2%

240

1.5%

+14

+5.8%

Total adjusted revenue

20,427

100%

15,695

100%

+4,732

+30.1%

 

Adjusted revenue grew by 30.1% year-on-year to RUB 20,427 million for the nine months of 2017 from RUB 15,695 million in the corresponding period of 2016, due to an increase in revenue from integrated freight forwarding and logistics services, terminal services, bonded warehousing services and agency fees, which was, in turn, partially offset by a decrease in rail-based container shipping services and truck deliveries.

 

Adjusted revenue grew by 29.7% year-on-year to RUB 7,442 million in the third quarter of 2017 from RUB 5,738 million in the corresponding quarter of 2016, primarily as a result of an increase in integrated freight forwarding and logistic services, as well as terminal services, bonded warehousing services and agency fees.

 

The following table sets out the components of relative contribution to adjusted revenue for the three months ended 30 September 2017 and 2016, respectively.

 

3Q 2017

3Q 2016

Year-on-year change

RUB mln

share, %

RUB mln

share, %

RUB mln

Percent

Adjusted integrated freight forwarding and logistics services

6,008

80.7%

3,692

64.3%

+2,316

+62.7%

Rail-based container shipping services

344

4.6%

1,042

18.2%

-698

-67.0%

Terminal services, bonded warehousing services and agency fees

964

13.0%

681

11.9%

+283

+41.6%

Truck deliveries

30

0.4%

238

4.1%

-208

-87.4%

Other

96

1.3%

85

1.5%

+11

+12.9%

Total adjusted revenue

7,442

100%

5,738

100%

+1,704

+29.7%

 

Integrated freight forwarding and logistics services

Revenue from integrated freight forwarding and logistics services increased by 49.3% year-on-year to RUB 40,990 million and by 57.8% year-on-year to RUB 15,929 million for the nine months and three months ended 30 September 2017, respectively.

 

Adjusted revenue from integrated freight forwarding and logistics services was up 54.2% year-on-year to RUB 15,217 million for the nine months of 2017, on the back of growing revenue-generating volumes and continuing shift of customers' preferences towards complex and integrated transportation services. For the same reasons, in the third quarter of 2017, this revenue item grew by 62.7% year-on-year to RUB 6,008 million, mainly as a result of an increase in revenue-generating transportation volumes.

 

Rail-based container transportation services

Revenue from rail-based container transportation was down by 34.8% year-on-year to RUB 1,992 million for the nine months ended 30 September 2017, from RUB 3,057 million in the corresponding period of 2016. In the third quarter of 2017, revenue from rail-based container transportation decreased by 67.0% year-on-year to RUB 344 million. The decline was due to customer demand continuing to shift towards integrated freight forwarding and logistics services.

 

Terminal services, bonded warehousing services and agency fees

 

Revenue from terminal services, bonded warehousing services and agency fees, increased by 38.4% year-on-year to RUB 2,588 million for the nine months of 2017 from RUB 1,870 million for the same period of 2016. In the third quarter of 2017, revenue from terminal services, bonded warehousing and agency fees, increased by 41.6% year-on-year to RUB 964 million. This was primarily driven by an increase in agency fees, certain reclassification of freight forwarding and logistics services, as well as growth in handling volumes.

 

Since 30 June 2017, this revenue item includes the revenue from bonded warehousing services, which was previously presented as a standalone item. This was done to reflect the amendments in the Company's price list and unified list of services adopted in the second quarter of 2017.

 

Truck deliveries

Revenue from truck deliveries for the nine months ended 30 September 2017 decreased by RUB 281 million, or 42.8% year-on-year, to RUB 376 million, from RUB 657 million for the same period of 2016. Revenue from truck deliveries in the third quarter of 2017 decreased by RUB 208 million, or 87.4% year-on-year, to RUB 30 million, from RUB 238 million in the corresponding period of 2016. This was mainly due to a higher share of truck transportation provided within integrated logistics services.

 

Other revenues

Since the third quarter of 2017, a new price list was adopted by the Company, according to which some freight forwarding fees were reclassified into rail transportation and handling tariffs. This led to a substantial reduction in this revenue item. Therefore, it was considered as insignificant and accounted for as other revenues.

 

Revenues from other freight forwarding and logistics services, which comprise mainly freight forwarding and logistics services of a non-integrated nature, increased by 12.9% year-on-year to RUB 96 million in the third quarter of 2017, compared to RUB 85 million for the corresponding period of 2016, reflecting an increase in transportation volumes and change in the Company's services structure.

 

For the same reason, revenue from other services for the nine months ended 30 September 2017 increased by 5.8% year-on-year to RUB 254 million, compared to RUB 240 million for the corresponding period of 2016.

 

Operating expenses

The following tables provides a breakdown of the Company's operating expenses for the third quarter and nine months ended 30 September 2017 and 2016, respectively.

 

Operating expenses structure for the three month period

3Q2017

3Q2016

RUB mln

% of operating expenses

% of total revenue

 RUB mln

% of operating expenses

% of total revenue

Third-party charges related to principal activities

10,127

67.5%

57.6%

7,619

61.6%

57.0%

Freight and transportation services

1,623

10.8%

9.2%

1,555

12.6%

11.6%

Payroll and related charges

1,231

8.2%

7.0%

1,117

9.0%

8.4%

Depreciation and amortisation

677

4.5%

3.9%

647

5.2%

4.8%

Materials, repair and maintenance

867

5.8%

4.9%

797

6.4%

6.0%

Taxes other than income tax

2

0.0%

0.0%

122

1.0%

0.9%

Rent

72

0.5%

0.4%

65

0.5%

0.5%

Other expenses

389

2.6%

2.2%

441

3.6%

3.3%

Total operating expenses

14,988

100.0%

85.3%

12,363

100.0%

92.6%

 

Operating expenses structure for the nine month period

9M 2017

9M2016

RUB mln

% of operating expenses

% of total revenue

 RUB mln

% of operating expenses

% of total revenue

Third-party charges related to principal activities

27,815

65.4%

57.7%

21,205

61.4%

57.5%

Freight and transportation services

4,869

11.5%

10.1%

4,312

12.5%

11.7%

Payroll and related charges

3,932

9.2%

8.2%

3,530

10.2%

9.6%

Depreciation and amortisation

1,977

4.7%

4.1%

1,858

5.4%

5.0%

Materials, repair and maintenance

2,201

5.2%

4.6%

1,861

5.4%

5.0%

Taxes other than income tax

405

1.0%

0.8%

411

1.2%

1.1%

Rent

200

0.5%

0.4%

227

0.7%

0.6%

Other expenses

1,113

2.6%

2.3%

1,135

3.3%

3.1%

Total operating expenses

42,512

100.0%

88.1%

34,539

100.0%

93.6%

 

TransContainer's total operating expenses increased by RUB 7,973 million, or 23.1% year-on-year, to RUB 42,512 million for the nine months ended 30 September 2017, from RUB 34,539 million for the corresponding period of the previous year. This was mainly due to a significant increase in the third-party charges related to principal activities.

 

In the third quarter of 2017, the Company's total operating expenses grew by 21.2% year-on-year, or by RUB 2,625 million, to RUB 14,988 million for the reason stated above.

 

Cost of third-party charges related to principal activities

Costs of third-party charges related to principal activities increased by 31.2% year-on-year to RUB 27,815 million for the nine months ended 30 September 2017, from RUB 21,205 million for the same period of 2016. This was predominantly driven by a higher volume of the Company's operations, tariff indexing by Russian Railways and other subcontractors, growth in international transportations with the involvement of outsourced transportation services. The strengthening of the Russian rouble against the US dollar and Euro in the nine months ended 30 September 2017 as compared to the same period of 2016, partially offset this increase related to FX-denominated expenses, primarily charges of foreign rail administrations and sea shipping companies.

 

For the same reason, the costs of third-party charges related to principal activities increased in the third quarter of 2017 by 32.9% year-on-year to RUB 10,127 million, from RUB 7,619 million in the corresponding quarter of 2016.

 

Adjusted operating expenses

Adjusted operating expenses, as defined in the Adjustments and additional financial information section above, grew by 10.2% year-on-year to RUB 14,697 million for the nine months ended 30 September 2017, from RUB 13,334 million in the corresponding period of 2016, primarily due to an increase in freight and transportation services, materials, repair and maintenance costs and taxes other than income tax. This, in turn, was partially offset by a decrease in rent expenses.

 

In the third quarter of 2017, adjusted operating expenses increased by 2.5% year-on-year to RUB 4,861 million, from RUB 4,744 million in the third quarter of 2016, due to the reasons described above.

 

The following tables provide a breakdown of the Company's adjusted operating expenses for the third quarter and nine months ended 30 September 2017 and 2016, respectively.

 

Adjusted operating expenses structure and dynamics for three months ended 30 September 2017 and 2016

3Q2017                            3Q2016

Year-on-year change

RUB mln

%

RUB mln

%

RUB mln

Percent change

Freight and transportation services

1,623

33.3%

1,555

32.8%

+68

+4.4%

Payroll and related charges

1,231

25.2%

1,117

23.5%

+114

+10.2%

Depreciation and amortisation

677

13.9%

647

13.6%

+30

+4.6%

Materials, repair and maintenance

867

17.8%

797

16.8%

+70

+8.8%

Taxes other than income tax

2

0.0%

122

2.6%

-120

-98.4%

Rent

72

1.5%

65

1.4%

+7

+10.8%

Other expenses

389

8.0%

441

9.3%

-52

-11.8%

Adjusted operating expenses

4,861

100.0%

4,744

100.0%

+117

+2.5%

 

Adjusted operating expenses structure and dynamics for nine months ended 30 September 2017 and 2016

9M2017                            9M2016

Year-on-year change

RUB mln

%

RUB mln

%

RUB mln

Percent change

Freight and transportation services

4,869

33.1%

4,312

32.3%

+557

+12.9%

Payroll and related charges

3,932

26.8%

3,530

26.5%

+402

+11.4%

Depreciation and amortisation

1,977

13.5%

1,858

13.9%

+119

+6.4%

Materials, repair and maintenance

2,201

15.0%

1,861

14.0%

+340

+18.3%

Taxes other than income tax

405

2.8%

411

3.1%

-6

-1.5%

Rent

200

1.4%

227

1.7%

-27

-11.9%

Other expenses

1,113

7.6%

1,135

8.5%

-22

-1.9%

Adjusted operating expenses

14,697

100.0%

13,334

100.0%

+1,363

+10.2%

 

In the nine months of 2017, there were moderate fluctuations in the structure of the Company's adjusted costs, but these were within the range inherent to the Company's business model.

 

Freight and transportation services

Expenses related to freight and transportation services increased by RUB 557 million, or 12.9% year-on-year, to RUB 4,869 million for the nine months ended 30 September 2017. This increase is mainly due to the growth in the Company's operations, as well as tariff indexing by Russian Railways, which was partially compensated by the improved empty container fleet management.

 

Expenses related to freight and transportation services grew by only 4.4% year-on-year, or by RUB 68 million, to RUB 1,623 million in the third quarter of 2017 on the back of improved logistics and container fleet management

 

Payroll and related charges

Payroll and related charges increased by RUB 402 million, or by 11.4% year-on-year, to RUB 3,932 million for the nine months ended 30 September 2017, compared to RUB 3,530 million for the corresponding period of 2016. This increase was mainly due to the base salary indexing and performance-linked payments, which was partially offset by a decrease in TransContainer's average headcount from 3,634 to 3,537 employees on the year-on-year basis and an effect of pension plan reserve adjustments.

 

For the reasons stated above, in the third quarter of 2017, payroll and related charges grew by 10.2% year-on-year, or by RUB 114 million, to RUB 1,231 million. 

 

Depreciation and amortisation

Depreciation and amortisation increased by RUB 119 million, or 6.4% year-on-year, to RUB 1,977 million in the nine months of 2017, from RUB 1,858 million for the corresponding period of 2016, reflecting investments made throughout 2017.

 

For the same reason, in the third quarter of 2017, depreciation and amortisation increased by 4.6% year-on-year, or RUB 30 million, to RUB 677 million.

 

Materials, repair and maintenance

Expenses related to materials, repair and maintenance were up by 18.3% year-on-year to RUB 2,201 million for the nine months of 2017, compared to RUB 1,861 million for the corresponding period of 2016, due to an increase in a number of flatcar repairs resulted from a higher fleet utilisation, as well as higher average repair price resulted from an increase in prices for cast. This expense item was also affected by maintenance and repair works on the Company's terminals during the construction season.

 

In the third quarter of 2017, expenses related to materials, repair and maintenance were up 8.8% year-on-year to RUB 867 million, due to the reasons mentioned above.

 

Тахes other than income tax

Taxes other than income tax decreased by 1.5% year-on-year to RUB 405 million for the nine months ended 30 September 2017, from RUB 411 million for the corresponding period of 2016, primarily due to the dynamics of VAT settlements.

 

In the third quarter of 2017, taxes other than income tax dropped from RUB 122 million to RUB 2 million as a result of VAT settlements related to taxation of revenue form international transportation.

 

Rent

Rent expenses decreased by RUB 27 million, or by 11.9% year-on-year, to RUB 200 million for the nine months of 2017 from RUB 227 million in the corresponding period of 2016, mainly due to termination of operating lease contracts related to fixed assets in the first half of 2017.

 

Rent expense for the third quarter of 2017 increased by 10.8 % year-on-year to RUB 72 million due to an increased amount of short-term operating lease of containers from third parties.

 

Other operating expenses

Other operating expenses are an aggregate of various expense items such as security, consulting expenses, fuel and energy, licences and software, communication service and loss of sale of fixed assets. In the nine months of 2017, other expenses decreased by 1.9% year-on-year to RUB 1,113 million, from RUB 1,135 million in the corresponding period of 2016. This primarily resulted from a decrease in consulting and other costs, which was offset by an increase in costs related to fuel, energy, IT and communications. In the third quarter of 2017, other operating expenses decreased by RUB 52 million, or 11.8% year-on-year, mainly due to the reasons described above.

 

Interest expenses

Interest expenses increased by RUB 201 million, or 69.3% year-on-year, to RUB 491 million for the nine months of 2017 from RUB 290 million for the corresponding period of 2016, mainly due an issue of the RUB 5 billion bonds in September 2016.

 

For the same reason, interest expense in the third quarter of 2017 increased by RUB 64 million, or 83.1% year-on-year, to RUB 141 million from 77 million in the corresponding period of 2016.

 

Interest income

Interest income grew by RUB 57 million, or 30.0% year-on-year, to RUB 247 million in the nine months of 2017 from RUB 190 million for the corresponding period of 2016, as a decrease in average interest rates was offset by an increase in the amount of RUB-denominated deposits with banks throughout 2017.

 

Interest income in the third quarter therefore decreased by RUB 37 million, or 35.9% year-on-year, to RUB 66 million as a result of a decrease in interest rates.

 

Profit before income tax

As a result of the reasons described above, the Company's profit before income tax increased by RUB 3,318 million, or by 105.3% year-on-year, to RUB 6,468 million for the nine months ended 30 September 2017 from RUB 3,150 million for the corresponding period of 2016.

 

In the third quarter of 2017, profit before income tax increased by RUB 1,527 million, or by 110.5% year-on-year, to RUB 2,909 million from RUB 1,382 million in the corresponding period of 2016, as a result of the factors mentioned above.

 

Income tax expenses

Income tax expenses increased by RUB 773 million, or 151.9% year-on-year, to RUB 1,282 million for the nine months of 2017 from RUB 509 million for the corresponding period of 2016, due to an increase in taxable profit.

 

For the same reason, in the third quarter of 2017, income tax expenses increased by RUB 353 million, or by 158.3% year-on-year, to RUB 576 million from RUB 223 million in the corresponding quarter of 2016.

 

The effective tax rate for the nine months ended 30 September 2017 was up 19.8% from 16.2% in the same period of 2016, while the increase in the reporting quarter was 19.7% compared to 16.1% in the third quarter of 2016.

 

Total profit and comprehensive income for the period

As a result of the factors discussed above, the profit for the nine months ended 30 September 2017 increased by RUB 2,545 million, or 96.4% year-on-year, to RUB 5,186 million compared to RUB 2,641 million for the same period of 2016. Taking into account the exchange rate differences relating to foreign operations and other effects, the total comprehensive income for the reporting period increased by 130.2% amounted to RUB 4,969 million, compared to RUB 2,159 million for the nine months of 2016.

 

The profit for the third quarter 2017 increased by RUB 1,191 million, or 102.8% year-on-year, to RUB 2,350 million from RUB 1,159 million for the same period of 2016. Taking into account the exchange rate differences relating to foreign operations and other effects, the Company generated the total comprehensive profit of RUB 2,121 million in the third quarter of 2017 compared to the total comprehensive profit of RUB 1,110 million in the third quarter of 2016.

 

Liquidity and Capital Resources

As of 30 September 2017, the Company's net cash and cash equivalents amounted to RUB 5,011 million, while its current assets exceeded current liabilities by RUB 3,768 million.

 

The Company's business is asset and capital-intensive and requires substantial capital expenditure for the purchase of flatcars and containers, for the development of rail-side terminals and for modernising its lifting equipment and truck fleet and other purposes. During the reporting period, the Company's operations and its capital expenditures were financed mainly from internally generated cash flows.

 

Cash flows

The following table sets out the principal components of the Company's consolidated cash flows for the nine months ended 30 September 2017 and 2016, respectively.

 

Cash flows structure

 

RUB million

9M 2017

9M 2016

Net cash provided by operating activities

5,949

4,426

Net cash used in investing activities

-3,214

-1,017

Net cash used in financing activities

-3,282

3,855

Net increase in cash and cash equivalents

-547

7 264

Foreign exchange effect on cash and cash equivalents

33

-194

Net cash and cash equivalents at the end of the period

5,011

9,180

 

Cash flow generated by operating activities increased by RUB 1,523 million, or 34.4% year-on-year, to RUB 5,949 million for the nine months ended 30 September 2017 from RUB 4,426 million for the corresponding period of 2016, mainly due to an increase in operating profit, as discussed above.

 

Cash flow used in investing activities increased by RUB 2,197 million, or by 216.0% year-on-year, to RUB 3,214 million for the nine months ended 30 September 2017 from RUB 1,017 million for the corresponding period of 2016. This was primarily as a result of an increase in capital expenditures from RUB 1,326 million to RUB 3,483 million, respectively.

 

Cash flow from financing activities turned to negative RUB 3,282 million from positive RUB 3,885 million a year earlier due to scheduled debt repayments in 2017.

 

Capital expenditure

Capital expenditure increased by RUB 2,157 million, or by 162.7% year-on-year, to RUB 3,483 million in the nine months of 2017 from RUB 1,326 million in the corresponding period of 2016. The majority of the capital expenditure was spent on acquiring new ISO containers and flatcars.

 

Planned capital expenditure for 2017

 

The Company's capital expenditure programme is aimed at maintaining TransContainer's position as a market leader in the Russian container sector, strengthening its competitive advantages, as well as optimising its asset structure and key operational metrics.

 

The total capital expenditure for 2017 is budgeted at RUB 10.8 billion (excluding VAT and log-term financial investments). The 2017 CAPEX programme is focused on the acquisition of flatcars and ISO containers and further improvement of terminal infrastructure.

 

Capital resources

The Company's operations and capital expenditure have historically been financed from internally generated cash flow and proceeds from issuing domestic debt. As of 30 September 2017, the Company's financial indebtedness consisted of two outstanding bond issues and financial lease obligations in an aggregate amount of RUB 6,267 million, compared to RUB 9,137 million as of 31 December 2016. The Company's net debt at the end of the reporting period was RUB 1,217 million.

 

As of 30 September 2017, all the Company's financial indebtedness was unsecured. The Company's debt is rouble-denominated and has a fixed interest rate.

 

RUB-denominated bonds series 4

 

On 1 February 2013, the Company issued non-convertible five-year bonds for a total amount of RUB 5,000 million at a par value of RUB 1,000 each. Net proceeds from the issuance after the deduction of related offering costs amounted to RUB 4,988 million. The annual coupon rate of the bonds for five years is 8.35% with interest paid semi-annually.

 

The series 4 bonds are to be redeemed in four equal semi-annual instalments within the fourth and fifth years, the first and second instalments being made in July 2016 and January 2017, respectively. As a result, these bonds debt are classified as the short-term portion of the long-term bond issue with the carrying value amounted to RUB 2,588 million including the accrued interest in amount of RUB 88 million.

 

RUB-denominated bonds series BO-02

 

On 22 September 2016, the Company issued non-convertible five-year bonds for a total amount of RUB 5,000 million at a par value of RUB 1,000 each. Net proceeds from the issuance after deduction of related offering costs amounted to RUB 4,987 million. The annual coupon rate of the bonds for five years is 9.4% with interest paid semi-annually.

 

The series BO-02 bonds will be redeemed in four equal semi-annual instalments within the fourth and fifth years. As a result, these bonds are classified as long-term borrowings as at the reporting date.

 

As at 30 September 2017, the carrying value of the bonds amounted to RUB 4,999 million. The amount of accrued interest is RUB 12 million and has been included as short-term debt in the consolidated statement of financial position.

 

Working Capital

The Company's working capital is defined as the difference between its current assets and current liabilities. The table below sets out the key components of TransContainer's working capital for the nine months ended 30 September 2017 and 2016.

 

Working capital structure

 RUB million

30 September 2017

30 September 2016

Current assets

Inventory

246

246

Trade and other receivables

2,113

1,256

Prepayments and other current assets

4,447

3,515

Prepaid income tax

0

2

Short-term investments

39

67

Cash and cash equivalents

5,011

9,180

Non-current Assets classified as held for sale

0

0

Total current assets

11,856

14,266

Current liabilities

Trade and other payables

5,758

4,244

Short-term debt and current portion of long-term debt

1,280

2,564

Income tax payable

170

71

Taxes other than income tax payable

293

289

Provisions

0

9

Finance lease obligations, current maturities

0

18

Dividends payable

0

4,830

Accrued and other current liabilities

587

458

Deffered income

0

0

Total current liabilities

8,088

12,483

Working capital

3,768

1,783

Working capital increased by RUB 1,985 million to RUB 3,768 million at the end of the reporting period from RUB 1,783 million as at 30 September 2016, primarily due to a rise in short term investments and cash equivalents.

 

Downloads

 

The consolidated financial statements for the third quarter and nine months ended 30 September 2017 are available via the National Storage Mechanism at: www.hemscott.com/nsm.do or at the Company's website http://www.trcont.ru.

 

Conference call

 

TransContainer will host an analyst conference call on Tuesday, 28 November 2017, at 14:00 UK time / 17:00 Moscow time. Dial in details are as follows:

 

UK Free Call Dial In

0800 694 0257

Russia Dial In (from a landline)

810 8002 0972 044

Conference ID

2699985#

 

A replay of the call will be available until 28 December 2017 using the following details:

 

UK Free Call Dial In

0800 953 1533

Russia Dial In

8 499 677 1064

Replay Access Code

2699985#

 

Enquiries:

 

TransContainer

Andrey Zhemchugov

First Deputy Chief Financial Officer

+7 495 637 9178
+7 495 609 6062

 

E-mail

ir@trcont.ru

 

Website

www.trcont.ru

 

 

 Instinctif Partners

Galyna Kulachek/ Dinara Shikhametova

+44 (0) 20 7457 2020

 

 

About TransContainer

TransContainer (LSE ticker: TRCN) is the leading intermodal Transportation equipment for shipping cargo via various means of transport. Containers are durable enough for repeated use and can be stacked. Containers are divided into medium-duty (three- and five-tonne), which conform to former Soviet Union standards and are still used for shipments in Russia and the CIS, and ISO (20- and 40-foot) containers, which are used for Russian and international shipments. The universal standard unit TEU (twenty-foot equivalent unit) was introduced to measure transport flow volumes.
container
transportation company in Russia with a market share of approximately 47%. It is the market leader in Russia by A specialised type of rolling stock designed to carry ISO containers.
flatcar
fleet size, container transportation by rail and rail-side A place equipped for the trans-shipment and storage of containers. A container terminal
typically includes one or more container yards. Rail-based container terminals are equipped with spur tracks for loading and unloading containers to/from railroad platforms (cars).
container terminal
throughput. As at 30 September 2017, it owned and leased 24,235 flatcars and 71,075 ISO containers. TransContainer also owns a network of rail-side container terminals, located at 42 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company's joint venture JSC Kedentransservice ("Kedentransservice", or "KDTS") also operates 19 inland rail-side terminals in Kazakhstan. The Company's sales network comprises of 107 sales outlets in Russia, along with additional outlets across the CIS, Europe and Asia. TransContainer is listed at Moscow Exchange and LSE. The Company's major shareholder with 50% +2 shares is United Transportation and The process of organising a chain of delivery, and managing that chain in the broadest sense. This chain may encompass both deliveries of raw materials needed for production and management of material resources at an enterprise, delivery to warehouses and distribution centres, sorting, handling, and final distribution at the points of consumption. In the context of transportation services, the main service is that of delivering cargo across a delivery route.
Logistics
Company, established by Russian Railways, Belorussian Railway and Kazakhstan Temir Zholy.

Legal Disclaimer

 

Some of the information in this announcement may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward-looking statements by terms such as 'expect', 'believe', 'anticipate', 'estimate', 'intend', 'will', 'could', 'may' or 'might', the negative of such terms or other similar expressions. PJSC "TransContainer" wishes to caution you that these statements are only predictions and that actual events or results may differ materially. PJSC "TransContainer" does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of PJSC "TransContainer", including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries PJSC "TransContainer" operates in, as well as many other risks specifically related to PJSC "TransContainer" and its operations.

 

 


 

[1] Transportation of clients' containers by the Company's Cars for carrying cargo or passengers designated for railway transportation.
rolling stock
and own loaded containers by its own and third-party flatcars

[2] The For containers - transporting an empty container on a flatcar, for flatcars – a flatcar run without container(s) or any non-container cargo.
empty run
ratio is calculated as an average empty container*kilometers divided by an average total container*kilometers

 

[3] The empty run ratio is calculated as an average empty flatcar*kilometers divided by an average total flatcar*kilometers

 

 

 

 


This information is provided by RNS

The company news service from the London Stock Exchange

 

END

To top

2016 Annual Report

PDF-version of our latest Annual Report

Download >