OREANDA-NEWS. On September 01, 2009 Globaltrans, Russia's largest freight rail operator, released 1H09 IFRS results along with some additional operating figures, reported the press-centre of OTKRITIE FC.

The company outperformed competitors thanks to "strong relationship with key clients" and high share of universal open-top railcars in overall fleet mix. Globaltrans saw a mere 4% decline in freight turnover in 1H09 amid the 21% drop in market volume. Given that the market has started to show some signs of recovery, we assume that in 2H09 Globaltrans operating dynamics will be even stronger.

The company’s financials outpaced estimates despite aupswing in emptyrun ratio. The main reason for the 37% YoY decline in total revenue was ruble devaluation amid flat ruble pricing. Meanwhile, the average RZD tariff paid decreased further due to changes in the overall cargo mix in favor of low marginal Class 1 cargoes (primarily coal). This helped the company to partially offset the negative impact of a hike in the empty-run ratio for gondola cars (19% in 1H08, to 54% in 1H09). We expect the empty-run ratio to drop in 2H09, bolstering Globaltrans' operating margin.

Total debt decreased from US446m to US395m, mainly at the expense of the company's cash position. Nevertheless, Globaltrans' has shown an ability to control its debt burden even during the worst of the economic downturn. Net debt/ EBITDA 09 stood at just 2.2x.

Valuation and Action: We expect positive market reaction to the release of 1H09 IFRS figures and reiterate our BUY rating.