Traffic down 19% for Russian box terminal operator GPI
Global Ports Investments saw its container throughput levels slump 19% in 2016 against the previous year, as Russia’s challenging macro-economic backdrop continued to weigh on traffic.
The London-listed company, which has terminals in the Baltic and Russia’s Far East, saw consolidated volumes fall from 1.4m teu to 1.1m teu year on year, as capacity utilisation at terminals remained below 50%.
With volumes falling by double-digit levels, revenues followed suit.
GPI reported an 18.3% drop in revenues, from $405.7m to $331.5m, while lower throughput levels resulted in lower adjusted earnings, before interest, tax, depreciation and amortisation, which declined by 2.9% to $224.3m.
Having reported a $184.8m operating profit in 2015, the group reported a $500,000 loss for in 2016 on the back of weakening volumes and considerable net foreign exchange losses on financial activities.
“While we began to see some encouraging signs starting in the second half of 2016, the Russian container market remained sluggish for the year as a whole,” said Global Ports Management chief executive Vladislav Baumgertner.
The company did however manage to tap into additional revenue streams from other cargoes, as well as improve a number of efficiencies within the business, according to Mr Baumgertner.
“While these other cargoes represent a minor part of our business, it is noteworthy that our handling volumes of bulk increased 67% last year,” he said.
“We have further thoroughly analysed our business processes and drawn a clear roadmap to achieving additional efficiency gains in our operations going forward.”
Last year, the group also continued its deleveraging process with the repayment of nearly $400m of debt resulting from its acquisition of fellow Russain terminal operator the NCC Group in 2013, in a deal worth around $1.6bn. GPI took on $916m of debt as part of the takeover agreement.
“Through the issuance of local bonds and Eurobonds we have been able to hedge a large part of our interest rate risk and increase the Group’s financial flexibility while extending our debt maturity profile,”Mr Baumgertner said.
He is also more optimistic for the coming year amid some early signs of improvement in both consumer sentiment and broader economic environment in Russia, which the group is well positioned to capitalise on.
“After 21 months of decline, we began to see gradual market growth starting last May, which reached around 9% in the January-February 2017 period year on year.”
“We currently anticipate declines in our revenues per teu moving from an approximately 3% decline last year toward a double digit decline over the current year,” said Mr Baumgertner.
GPI has also announced that Mr Baumgertner will be stepping down from his role as chief executive at the company later this month, with current chief financial officer Mikhail Loganov taking his place.