Georgian Railway published FY14 results, surpassing our latest reforecast. Revenue was flat in US$ terms at US$ 289.7mn and grew 6.2% y/y in GEL terms to GEL 511.6mn due to a weak GEL against US$. EBITDA grew 5.5% y/y on the back of reduced operating expenses and accounted for US$ 141.6mn. EBITDA margin reached 48.9% from 46.4% in FY13. EBIT hit US$ 82.0mn – growing 12.4% y/y. EBIT margin increased to 28.3% in FY14 from 25.2% in FY13. GEL weakness caused a non-cash FX loss that drove finance costs up, reducing net profit to US$ 22.2mn and net profit margin to 7.7%. Due to US$ 41.1mn increase in cash, net debt-to-EBITDA improved to 2.71x (from 3.17x in FY13), leaving comfortable headroom for the Eurobond covenant of 3.5x.
FY14 revenue of US$ 289.7mn (US$ 289.6mn in FY13) came in flat (growing 0.1% y/y compared to 1.5% y/y in FY13). In GEL terms, revenue reached GEL 511.6mn (GEL 481.7mn in FY13) – a growth of 6.2% y/y (2.2% y/y in FY13), mainly caused by a weak GEL against US$ (FY14 average US$-GEL rate 6.2% y/y higher).
Freight traffic, holding the lion’s share (88.3% in FY14 and 88.5% in FY13) of revenue, accounted for US$ 255.8mn (US$ 256.3mn in FY13) and GEL 451.8mn (GEL 426.4mn in FY13) in FY14. Freight traffic revenue was down 0.2% y/y (up 5.0% y/y in FY13) in US$ terms and up 6.0% y/y (up 5.7% y/y in FY13) in GEL terms.
Revenue from freight car rental grew 3.8% y/y in FY14 (26.6% y/y drop in FY13) and generated US$ 21.4mn (US$ 20.6mn in FY13) or 7.4% of total revenues (7.1% in FY13). In GEL, freight car rental revenue increased by a healthy 10.2% y/y (down 26.0% y/y in FY13) to reach GEL 37.8mn (GEL 34.3mn in FY13).
Passenger traffic contributed US$ 10.4mn to the top line in FY14 (US$ 10.8mn in FY13), translating into a 4.4% y/y decrease (2.8% y/y increase in FY13). In GEL terms, passenger traffic remained largely flat at GEL 18.3mn (GEL 18.0mn in FY13) – modest growth of 1.5% y/y (3.5% y/y in FY13) and share in total revenue of 3.6% (3.7% in FY13).
