GR released 9M19 unaudited results together with Management Discussion and Analysis. Revenue was up 3.8% y/y to US$ 131.1mn in 9M. This increase was mostly driven by higher freight transportation revenue (US$ 81.2mn) reflecting pick up in dry cargo volumes (+17.5% y/y to US$ 48.4mn). Operating expenses declined 16.2% y/y to US$ 95.7mn in 9M19, mostly due to lower depreciation expenses. As a result adjusted EBITDA improved by 22.6% y/y to US$ 60.4mn with adjusted EBITDA margin climbing 7.1ppts y/y to 46.1% in 9M. Despite better operating performance the bottom line was negative US$ 23.0mn in 9M caused by GEL-depreciation related non-cash FX loss (US$ 45mn) and impairment loss on trade receivable (US$ 8.1mn).
Freight transportation, the largest revenue category for GR, continued growth in 3Q19, with revenue up 14.4% y/y to US$ 81.2mn in 9M19. Notably, surge in dry cargo transportation (up 17.5% y/y to US$ 48.4mn) had the largest effect on the overall cargo transportation revenues. Freight handling also increased, up 10.8% y/y to US$ 16.8mn. On the downside, logistic service revenues dropped 34.6% y/y to US$ 13.9mn and freight car rental revenue also declined 5.6% y/y to US$ 7.0mn. Meanwhile passenger traffic revenue increased by a mere 1.0% y/y (though up 12.8% y/y in GEL) in 9M19. Other revenues, accounting for just 2.3% of total, were up 27.0% y/y to US$ 3.0mn due to increased sales of materials and scrap.
9M19 operating expenses were down 16.2% y/y to US$ 95.7mn, as depreciation expenses reduced. End 2018 reduction in asset-base due to the significant impairment loss recognition reduced GR’s depreciation expenses by 34.4% y/y to US$ 23.4mn in 9M19. Employee benefits and electricity and other consumables, where the only categories that increased in GEL terms up 6.4% y/y to GEL 117.3mn and 2.7% y/y to GEL 33.8mn, respectively. While in USD, every cost item declined in 9M19, explained by GEL’s depreciation.
