Global Ports Investments has announced its operational results and published its consolidated financial statement for 2018.
The group’s consolidated marine container throughput increased 12.2% year-on-year in 2018 outpacing the market growth of 10.0%. out of the entire Russian port-handled container traffic of 4.87 mn TEU Global Ports’ terminals handled 1,352 thousand TEU, thus accounting for 27.8% of the Russian container market.
The bulk throughput grew 15.9% year-on-year to make 3.12 mn tons, a record level for the Group, driven by growth in bulk cargoes at PLP and ULCT. As a part of its strategy to focus on developing additional revenue streams and optimising its existing terminal infrastructure, the Group commissioned a new coal handling facility at Ust-Luga Container Terminal in December 2018.
Revenue increased by 4% to $343.6 mn. This was mainly driven by the 16.8% growth in consolidated non-container revenue. Consolidated container revenue was broadly flat in 2018 at $255.2 mn, a growth of 0.1% compared to 2017, as the 12.2% growth in consolidated marine container throughput was partially offset by a 10.1% decline in revenue per TEU.
According to Global Ports, only a low single digit percentage of the reduction in revenue per TEU was attributable to change in tariffs, with the majority of the decline largely attributable to lower share of imports and the change in customer and service mix.
Gross profit increased by 14% to $207.6 mn and adjusted EBITDA grew by 7.8% to $217.3 mn, driven by strict cost control.
Total operating cash costs decreased by 2% during the reporting period despite the double-digit growth in throughput of both container and non-container cargoes. FX adjusted total operating cash costs increased by around 5.8%.
Adjusted EBITDA in 2018 increased 7.8% to $217.3 mn mainly due to the growth in throughput and strict control over costs.
Operating profit in 2018 was $131.6 mn compared to $5.3 mn operating loss in 2017. According to Global Ports, the substantial increase was driven both by the growth in gross profit and the fact that 2017 was negatively impacted by non-monetary items such as impairment, loss from the group’s share of the result in joint ventures, and recycling of derivative losses previously recognized through other comprehensive income.
Loss before income tax increased from $24.1 mn in 2017 to $53.6 mn in 2018. This change was mainly driven by the depreciation of the Russian rouble, which resulted in a loss on revaluation of US dollar-denominated borrowings (from group and non-group entities) in the group’s Russian subsidiaries having the Russian rouble as their functional currency.
The capital expenditure on a cash basis was $40.8 mn in 2018. Maintenance capital expenditure focused on planned maintenance projects, scheduled upgrades of existing container handling equipment and coal handling equipment at VSC as well as the implementation of environmental protection measures related to coal handling. Maintenance capex remained in line with the group’s mid-term guidance of $25-35 mn per annum with the remainder accounting for development of a new coal handling facility at ULCT.
Net cash from operating activities increased by $0.4 mn, or 0.2%, from $173.9 mn in 2017 to $174.3 mn in 2018.
The group’s net debt was reduced by a further $85.6 mn over the period with net debt to adjusted EBITDA decreasing to 3.6x as of 31 December 2018 from 4.3x as at the end of 2017. The total debt decreased by $124.4 mn in 2018.
Vladimir Bychkov, CEO of Global Ports Management, commented: “2018 has been a year of regaining forward momentum for Global Ports. We delivered double digit container handling growth, outpacing the growth of the Russian container market, and achieved another year of record volume of bulk cargo throughput. Coupled with excellent cost control, this performance enabled us to grow both Adjusted EBITDA and Adjusted EBITDA margin. We generated strong Free Cash Flow and continued to deleverage further, reducing Net Debt to Adjusted EBITDA to 3.6x, our lowest level since 2014”.
“Our strategic focus on building alternative revenue streams is delivering with our non-container business now representing more than a quarter of our revenue. In addition, we laid a solid foundation for future performance by launching a new coal handling facility at ULCT”.
Looking more broadly at the industry, the Russian container market is experiencing fundamental change. Over the last five years, laden export container volumes have increased by 76%, rapidly shifting the market towards an import-export balance. We need to ensure that our business adapts in line with these market changes or, even better, sets the trend. “My core priority as CEO is to ensure that the Group remains focused and capable of capturing organic growth opportunities that are available in both the container and bulk cargo market in order to further improve the utilisation of our unique asset base.”