TransKonteyner OAO: Results for the three months ended 31 March 2013

JSC "TransContainer" yesterday published its management report together with the unaudited interim condensed financial statements for the three months ended 31 March 2013. 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 intermodalTransportation 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 of 31 March 2013, the Company estimates that it accounts for 48.5% of all rail container transportation in Russia. It owns and operates 25,044 flatcars and more than 61,000 containers. TransContainer also owns a network of rail-side container terminals located at 46 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company also operates 18 inland rail-side terminals in Kazakhstan via its subsidiary KedenTransService. The Company's sales network is comprised of approximately 140 sales outlets across Russia with a presence in the CIS, Europe and Asia.
During the first three months of 2013, the rail container market conditions continued to be under pressure due to continuing slowdown in the Russian economy. The Company's rail container transportation volumes in Russia for the three months ended 31 March 2013 decreased by 1.3% to 342 thousand twenty-foot equivalent units ("TEU") compared to 347 thousand TEU in the same period of 2012, whilst revenue-generating transportation [1] volumes decreased by 0.4% to 259 thousand TEU. Terminal handling volumes decreased for the reporting period by 10.9% to 297 thousand TEU, mainly due to a 69.4% decrease in handling of medium-duty containers.
During the reporting period, the Company's total revenue increased by 0.3% to RUR 8,558 million, adjusted revenue decreased by 6.1% to RUR 5,633 million, operating profit decreased by 13.6% to RUR 1,595 million, and EBITDA fell by 12.3% to RUR 2,129 million. However, profit for the period decreased by just 7.5% from RUR 1,198 million to RUR 1,108 million while total comprehensive income for the period grew by 23.9% from RUR 939 million for the first three months of 2012 to RUR 1,163 million for the reporting period.
As of 31 March 2013, the Company's total debt was RUR 9,346 million and net debt of only RUR 5,112 million, bringing the Net Debt/ LTM EBITDA ratio to a very comfortable 50.9%.
Capital expenditure for three months ended 31 March 2013 shrunk by 49.3% to RUR 305 million reflecting the weak operating environment and the Company's attitude to accumulate a cash cushion in anticipation of the RUR bond series 1 redemption in February 2013. In accordance with the Company's policy, all capital expenditure during the reporting was financed by the Company's own cash flow.
Outlook
After reaching a bottom in January-February 2013 the Russian container market started to grow again in March 2013. It supports management's view that the Russian rail container market is expected to demonstrate middle single-digit growth rates for the year 2013 as a whole, subject to overall economic environment. At the same time, the Company's management notes the vulnerability of Russia's economy to any external shocks and its mixed performance in 2013.
The weaker demand for rail cargo transportation, higher levels of competition in the container segment putA legal entity or individual entrepreneur owning wagons and containers, or possessing them on any other basis, that participates, pursuant to a contract with a carrier, in the carriage process using the aforementioned cars and containers.
operator tariffs under pressure in the first quarter of 2013 and the pricing environment has not been restored yet. As well as looking to continue with its marketing efforts and to improve the quality of service, the Company's management aims at keeping profitability levels in line with those achieved in 2012.
The Company's management will continue to invest inCars for carrying cargo or passengers designated for railway transportation.
rolling stock and terminal modernisation as well as opportunistic M&A in line with its strategy, subject to changes in the economic environment. In the long term we continue to believe that the Russian container transportation market is fundamentally attractive with sustainable growth potential, driven by Russia's economic development, its further involvement in international trade, WTO accession, growth in consumer demand andThe use of containers for cargo transportation, supply and storage.
containerisation.
Key operating results
The Company's rail container transportation volumes in Russia for the first quarter of 2013 decreased by 1.3% to 342 thousand TEU compared to 347 thousand TEU for the same period of 2012. This was mainly due to an 11% drop in domestic transportation volumes, partly compensated for by growth in imports, which grew by 36.4%. A decrease in the Company's domestic transportation on the back of a 2.8% reduction in Russia's total domestic rail container turnover and the tightening competition on domestic routes, was also driven by a change in focus towards the fast growingImport-bound container traffic, as indicated in the respective waybill. import transportation segment and partial employment of the Company's rolling stock in Kazakhstan and Central Asia by its subsidiary KedenTransService.
Source: TransKonteyner