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Global Ports Investments PLC: 2016 Full-Year Results

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Global Ports Investments PLC (“Global Ports” or the “Company”, together with its subsidiaries and joint ventures, the “Group” or the “Global Ports Group”; LSE ticker: GLPR) today announces its operational results and publishes full-year results for the financial year ended 31 December 2016.

Certain financial and operational information which is derived from the management accounts is marked in this announcement with an asterisk {*}. Information (including non-IFRS financial measures) requiring additional explanation or terms which begin with capital letters and the explanations or definitions thereto are provided at the end of this announcement. 

SUMMARY

While there were elements of a recovery in the Russian container market in the second half of 2016, resulting in a 3.8% year on year increase in volumes in that period, the recovery for the full year remained subdued with an overall increase of 1%.

Global Ports’ Consolidated Marine Container throughput declined 19%* in 2016 to 1,128 thousand TEU* largely driven by the disciplined commercial strategy of the Group against a backdrop of growing competition and low capacity utilisation rates[1] in the Russian container industry. Global Ports’ Consolidated Marine Container Throughput volumes in the second half of 2016 decreased by 3.6% compared to the first half of 2016.

In the reporting period, the Group continued to focus on developing additional revenue streams, improving operational efficiency, free cash flow generation and deleveraging. As a result of these actions, Global Ports’ Adjusted EBITDA was USD 224.3 million* with a healthy Adjusted EBITDA margin of 67.7%* and strong Free Cash Flow of USD 178 million*. The Group decreased its Total Debt[2] by a further USD 104.2 million* over the period.

Group financial and operational highlights for 2016

●       The Russian container market turned from negative in the first half of 2016 (-1.9% year on year) to positive in the second half of 2016 (+3.8% year on year). This resulted in a 1% year on year increase overall in 2016. Total container throughput in the Russian container market for 2016 was 3.8 million TEU, while capacity utilisation across the industry remained below 50%.

●       The Group’s Consolidated Marine Container Throughput declined 19%* to 1,128 thousand TEU* in 2016 compared to 1,393 thousand TEU* in 2015. The decline in throughput was largely driven by the Group’s focus on providing a premium quality service and maintaining a disciplined commercial strategy during the period against a backdrop of increasing competition in a market with low capacity utilisation.

●       In order to improve utilisation of available space at its terminals, the Group continued to focus on increasing bulk cargo volumes in 2016. As a result, Consolidated Marine Bulk Throughput in 2016 increased by 884 thousand tonnes*, or 66.7%*, reaching a record for the Group of 2.21 million tonnes*, compared to 1.32 million tonnes* in 2015.

●       Consolidated Inland Container Throughput increased 58.4%* year on year to 174 thousand TEU* in 2016, due to ongoing containerisation in Russia and the Group’s efforts to attract container volumes for exporting cargoes out of Russia.

●       Consolidated Inland Bulk Throughput increased 11.1% in 2016, to 304 thousand tonnes*, compared to 273 thousand tonnes* in 2015.

●       Revenue in 2016 was 18.3% lower than in 2015 at USD 331.5 million while full-year Adjusted EBITDA declined 22.9%* to USD 224.3 million*, mainly due to lower container throughput and a 2.4% decrease in average revenue per TEU[3], which was partially offset by growth in other cargo throughput.  

●       The Group’s capital expenditures on a cash basis amounted to USD 18.0 million in 2016, well below the USD 25-35 million guidance provided. The low level of CAPEX was achieved without compromising service quality, reliability or the safety of operations at the Group’s already well invested terminals.

●       Free Cash Flow remained at a high level, with USD 178 million* generated during the period, although this was 24.8%* below what was generated in 2015. This decline was primarily due to a decrease in cash generated from operations.

●       The Group continued to focus on deleveraging: Net Debt[4] was reduced by USD 100.3 million* in 2016. The Group decreased its Total Debt by USD 104.2 million* over the period with Total Debt down nearly USD 400 million* since the NCC Group acquisition at the end of 2013.

●       The Group successfully refinanced most of its debt portfolio by issuing a USD 350 million Eurobond due January 2022, a USD 350 million Eurobond due September 2023 and three 5-year tranches of Russian rouble denominated bonds swapped to USD for an aggregate amount of approximately USD 209 million*. This allowed Global Ports to its maturity profile, as well as increase the share of fixed-rate borrowings to almost 100%* of its portfolio.

●       In line with statements made in March 2015, the Group continues to prioritise deleveraging over dividend distribution.

 

Vladislav Baumgertner, CEO of Global Ports Management, commented:

“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. Within this context we focused on developing additional revenue streams from other cargoes as well as improving efficiencies within our business. While these other cargoes represent a minor part of our business, it is noteworthy that our handling volumes of bulk increased 67% last year. We have further thoroughly analysed our business processes and drawn a clear roadmap to achieving additional efficiency gains in our operations going forward.

The Group successfully continued the deleveraging process with the repayment of nearly USD 400 million* in debt since the NCC acquisition in 2013, which is a testament to the Group’s ability to generate cash even in difficult markets. 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.

There are some early signs of improvement in both consumer sentiment and the broader macro-economic environment in Russia. 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. In order to stimulate handling volumes so as to benefit from this market growth, we introduced significantly more pricing initiatives in the start of 2017 than in prior periods. Given this and the intensifying pressure on prices as a result of the high level of unutilised capacity in the market, we currently anticipate declines in our revenues per TEU moving from an approximately three percent[5] decline last year toward a double digit decline over the current year.  

I am convinced, that, Global Ports’ well invested assets, operational skills and high service quality will ensure that we are well positioned to capitalise on any ongoing market recovery.”

Source: globalports