[020916.EN.BIZ] FESCO H1 Profit Falls 37pc to US$39.4 Million As Revenue Slips 33pc

RUSSIA's FESCO Transportation Group first half operating profit decreased 37 per cent to US$39.4 million, drawn on revenues of $257.9 million, down 33 per cent year on year.

The decline was mainly driven by lower container throughput and decrease in average freight rates, as well as a drop in bunkering business, reports PortNews of St Petersburg.

FESCO's performance was hit hard by an unfavourable macroeconomic environment, a freight exchange rate fluctuation and negative trends in the transportation market.

In response to the current conditions in the industry, FESCO is primarily focused on cost discipline, operational efficiency and core business development in the first half.

As part of its strategy to extend its geographical reach, FESCO launched several new routes, including services from Vladivostok to Central Asia and a transit service for Chinese cargo through the Russian Far East via Corridor Primoriye-1.

This is an overland service from China to Russia, as well as the development of export shipments via Corridor North–South.

"FESCO also optimised its sea line routes and attracted additional partners to vessel sharing agreements in order to enhance operational efficiency and reduce costs," said a company statement.

The group rented out the fleet of gondola cars, which were considered as non-core assets, and focused on fitting platforms and box cars.

The group also engaged in a debt restructuring, entering into discussions with holders of issued bonds and other lenders under its bilateral facilities.

First half container throughput fell 15 per cent year on year to 148,300 TEU, which is in line with negative market trends.

General cargo and non-container throughput increased 24 per cent year on year to 1.31 million tons.

The port division's revenue fell 11.9 per cent to $52 million due to decline in container handling volumes. First half rail container transport fell three per cent to 86,400 TEU year on year. The rail division's revenue in the first half fell 25.9 per cent to $43 million.

The group's export-import sea container trade volumes declined 25 per cent year on year to 126,500 TEU in 1H16. The average import freight rate decreased 12 per cent year on year 1H16 on the core routes in Southeast Asia.

Intermodal freight declined 17 per cent to 71,000 TEU on the back of falling import volumes. The average intermodal freight rate on key import routes dropped 10-15 per cent from the beginning of the year. Domestic sea container liftings fell seven per cent to 24,900 TEU.

The shipping division's first half revenue fell 31.3 per cent to $33 million, its results significantly affected by lower time-charter rates and general lack of demand for container fleet.

Source : HKSG.