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Russian economic woes affect Global Ports’ volumes

Russian economic woes affect Global Ports’ volumes
Volumes fell at Global Ports' Petrolesport (PLP) terminal in St Petersburg

Russia’s largest container terminal operator, Global Ports, suffered a difficult 2014, beset by the country’s economic problems, as per its latest results.

Gross container throughput declined 4.3% year-on-year to 2.66m teu, down from 2.77m teu in 2013, mainly due to falling volumes at its St Petersburg terminals.

Petrolesport (PLP) handled 658,000 teu, a decrease of 7.5% compared to 711,000 teu in 2013 while First Container Terminal (FCT) saw volumes tumble 13.2% from 1.1m teu in 2013 to 941,000 teu last year.

However, volumes at Ust Luga Container Terminal (ULCT) jumped by 68.1% to 104,000 teu and containerised cargo handled in the company’s Finnish ports segment rose by 12.2% to 251,000 teu.

In a conference call with analysts, Global Ports’ chief commercial officer, Roy Cummins, said: “The outlook is uncertain. We have seen a sharp decline in the rouble exchange rate and an increase in [the Russian] interest rate. Both of those things clearly have impacted containerised imports and consumer sentiment.

He added: “In January and February container volumes in Russia saw a sharp decline in the order of 23% down year-on-year. It is likely that that level of performance will continue through the first quarter and into the early second quarter.”

Revenue last year was 4.5% lower than in 2013 at $562.4 m due to lower throughput in both container and bulk cargo which was partially offset by growth of 3.5% in revenue per teu to $212m per teu.

This happened because Global Ports prioritised pricing discipline above market share according to Cummins.

The company made a net loss of $193.1m following a $114m net profit in 2013, with the blame partly attributed to the rouble’s 41% depreciation against the US dollar last year.

According to Global Ports, US dollar denominated borrowings in the group’s subsidiaries were hit by the rouble’s devaluation, creating a non-cash net foreign exchange loss of $418.5m and an increase in the net finance cost.