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  • 2007 April 24

    FESCO to invest a billion

    FESCO Group has officially announced it plans to take leading positions at Russian market of inter-modal cargo transportation and logistics within three coming years. The Group intends to become one of the leading companies at the market of container and bulk cargo transportation. FESCO’s total investments  till 2010 may amount to $1 billion. PortNews IAA quotes FESCO’s presentation held for journalists in Moscow.  

     

    Successful results of 2006

    Far Eastern Shipping Company (FESCO) considers the year of 2006 to be a turning point in its history. It was in 2006 that the Group’s shareholders came to a decision on business diversification: from the sea carrier in the Far East region to a national multimodal transport-and-logistics company. The decision was followed by acquisition of a 50% stock of National Container Company (the other half is owned by FIRST QUANTUM) and a 100% stock of Transgarant and of TIS. Earlier, the Group set up a JV with Russian Railways – Russkaya Troika CJSC, specializing in railway transportation of containers and completely controlled DalRefTrans and Inkotek.  Thus, by spring 2007, the Group comprised the assets of bulk and railway carriers as well as terminal servicing of containerized cargo. Geographically, FESCO’s business expands from the Pacific Ocean to the Baltic Sea.

     

    The Group’s policy resulted in growth of its sales by almost 7% - to $577 million and in over 6-fold growth of net profit – to $69 million. The company’s capitalization doubled in 2006, RTS reports, while from the end of 2006 to the first decade of April 2007 it grew from $493 million to $1186 million.

     

    Investments

    FESCO plans step-by-step implementation of its strategic purposes. In 2007 the Group plans to reinforce its leading positions at Russian container market through increasing total volume of container operations (port transshipment, sea service and railway transportation) to 1,800 thou TEU. For that purpose FESCO is to diversify its own assets. FESCO’s fleet is to number 64 vessels while its rolling stock is to exceed 15,000 units. In 2007, investments are to total $360 million.

     

    Special investments are planned for construction of new terminals. Within three years the Group will invest $170 million into construction of Baltic Container Terminal in the port of Ust-Luga (Leningrad region, project of NCC), finalization of a logistics terminal in the village of Shushary (St. Petersburg, project of NCC) will take $83.5 million, construction of a container terminal in the port of Vladivostok - $72 million. Besides, FESCO will invest over $5 million into IT-projects.

     

    In order to finance part of the projects FESCO plans to carry out additional emission in summer 2007. 306 509 000 securities (15% of authorized capital) are to be placed through open subscription. Estimated volume of raised funds is to total about $150 million.

     

    Implementation of the Group’s business plan is to have visible results in a year or two. Within the framework of Transgarant activities the Group is to develop non-mainline transportation of containers. Besides, a railway-sea service is to be arranged for transportation of bulk cargo. Volume of inter-modal transportation is to be increased through service efficiency and quality improvement at the terminals of NCC. In particular, FESCO plans to provide owners of container cargo with the following services of guaranteed quality and terms: sea service, port transshipment, railway transportation. The development of this service implies entry to the market of inter-modal transportation at the Baltic and Black Seas, as well as opening of a feeder line service.
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