Net profit of Novorossiysk Commercial Sea Port up to $84.5 mln in H1 08
OJSC Novorossiysk Commercial Seaport (LSE: NCSP, RTS & MICEX: NMTP) announces unaudited consolidated financial results for the first six months of 2008 to International Financial Reporting Standards (IFRS).
Igor Vilinov, CEO of NSCP, said in comment to the financial results for the first half of 2008: “In the reporting period we were able to achieve increased profitability – net profit grew from 28.5 Mln USD to 84.5 Mln USD. The return on equity (ROE) also increased substantially from 9.2% to 23.3%. This was possible largely due to the consolidation of the stevedore business.
Company management sees the progressive increase in the share of high-margin cargo in the overall cargo turnover as a result of the investment program underway as the basis for maintaining profitability in the foreseeable future.”
“Amid a drop in liquidity on global financial markets the strong financial stability of the company's business model is underpinned by its favorable debt structure, in which short-term debt made up only 7.6% as of mid-2008. Debt shrank by 0.7% in the first half of the year to 529.8 million USD. Spending to service the debt dropped from 24.3 million USD to 15.6 million USD. The company in the first half did not assume new borrowing and the investment program was financed out of company funds,” Igor Vilinov added.
A combination of factors contributed to NCSP Group’s revenue growth by 59% from 197.93 Mln in the first half of 2007 to 314.66 Mln USD in the first six months of 2008, including growth in additional services, launch of new projects, increased tariffs and an increase in the share of highly profitable cargo in overall cargo turnover.
As a result of stevedore companies consolidation in 2006, NCSP was able to increase additional services for clients, including complex transport-expediting services, cargo storage, sale of separation materials, and other port services. Company revenue in the first half of 2008 grew by 33.80 Mln USD from this business segment only.
The introduction of new container, petroleum product and grain loading capacity was an important factor in revenue growth, boosting revenue by another 25.04 Mln USD.
NCSP has also added 28.28 Mln USD to its revenues from continuous replacement of low profit cargo with more profitable cargo, while increase in overall cargo turnover was insignificant.
The increase in tariffs for stevedore services in August and December 2007 enabled NCSP in the first half of 2008 to generate 29.61 Mln USD in additional revenue.
A number of positive changes occurred in revenue structure in the first half of the year amid an insignificant increase in cargo turnover.
According to management accounting, total investment since the inception of NCSP’s investment program totaled some 290 Mln USD, including 47.9 Mln USD in the first half of 2008.
The Novorossiysk grain terminal (OJSC NGT) was fully launched in the first half of 2008. Investment in the project totaled 82.6 Mln USD.
Construction of a light petroleum products terminal is being completed by OJSC IPP, a subsidiary of NCSP. The new terminal will be launched in test mode in early October. It will have capacity for 1 million tonnes of petroleum products per annum. Investment in the project totaled 22.0 Mln USD at the end of the reporting period, or 62% of project cost.
A container terminal is being built by BSC Ltd., a subsidiary of NCSP, in Baltiisk port of Kaliningrad region, under confirmed business plan. Two Liebherr LHM-400 mobile cranes were purchased for the terminal in August 2008 for more than 5 million euros.
Reconstruction of the Sheskharis oil terminal also continued in the first half of 2008. Investment totaled 71.2 Mln USD at the end of the period or 55% of project cost. The project is scheduled for completion in 2010.
Other projects under NCSP investment program are going according to plan with pre-design and design work in progress.