OREANDA-NEWS. FESCO Transportation Group (MOEX: FESH) provides a trading update with the operational and consolidated financial results as per IFRS for the three month period ended March 31, 2014.

Highlights:

- In the short term, the slowdown of economy growth and overall volatile macroeconomic environment caused weakness in the sectors where the Group operates

- The Group's revenue declined by 11.9% YoY mostly due to ruble devaluation, which contributed to more than half of the decrease, and continued rail market weakness

- Significant increase in export volumes in 1Q2014 is seen as a sustained trend for the year

- The Group's EBITDA was impacted by mixed divisional profitability and increase in export volumes. EBITDA growth in Port, Bunkering and Shipping Divisions was offset by the results of Rail Division and LLD

- 1Q2014 Group's consolidated EBITDA excluding one-offs amounted to USD 34.5m

- Despite the market volatility the Group continued to make selective capital investments, mostly in Ports Division, in line with its long term strategy

Group Financial Results

Group performance USD millions

1Q 2013

1Q 2014

Dynamics

Revenue

275.3

242.5

-11.9%

EBITDA

48.1

32.8

-31.7%

EBITDA Margin

17.5%

13.5%

-4.0 pt

Capital Expenditures

10.0

18.4

+84.0%

Divisional Performance Highlights

Port Division

- Growth of import container handling (+8% YoY) is above the market (+2% YoY)

- Strong increase in general cargo throughput volumes (up 35% YoY)

- Revenue declined by 5% YoY due to ruble devaluation. Excluding the impact of FX rate fluctuation, there was a single-digit revenue growth in 1Q2014

- Ongoing focus on optimization of the cost structure in addition to a natural FX hedge on the cost side led to an improvement in EBITDA margin by 5 pt

Rail Division

- Rail container transportation up 9.5% YoY to 70 thousand TEU due to the increased fleet of fitting platforms

- Number of container block trains increased by 10% from 248 to 274

- Single-digit decrease in non-container cargo load due to decline in coal transportation volumes

- Revenue decreased by 40%, EBITDA decreased by 53% due to continued decrease in rates and ruble devaluation

Liner and Logistics Division

- Strong growth of export-import sea lines container transportation volumes (up 11% YoY) and improving performance in domestic sea lines container transportation volumes (flat YoY)

- Zero EBITDA is comparable to 1Q2012 result (historically low results in 1Q due to seasonality factors). The decrease of EBITDA in 1Q2014 vs. 1Q2013 was mainly driven by the reduction of freight rates

Shipping Division

- Revenue and EBITDA growth due to acquisition of new fuel-efficient vessels earlier in 2013, positive result from icebreakers and profitable contract with the third party

Bunkering

- Successful ramp up of the bunkering business launched in 2Q2013 resulted in USD 29m contribution to the Group's revenue and USD 4m contribution to the Group's EBITDA with attractive further growth potential