• Consolidated Revenue: 8% decrease year-on-year for the first half of 2024.
• Adjusted EBITDA: RUB 27.7 billion, a 9% increase compared to the first half of 2023.
• Total CapEx: Approximately RUB 4 billion, primarily for repairs of existing rolling stock.
• Free Cash Flow: RUB 18.7 billion, a 34% increase compared to the second half of 2023.
• Net Debt: Negative RUB 50 billion as of June 30, 2024.
• Operating Cash Costs: Increased by 6% year-on-year.
• Empty Run Costs: Decreased by 1%.
• Employee Benefit Expenses: Increased by 8% year-on-year.
• Repair and Maintenance Costs: Increased by 22% year-on-year.
• Locomotive Costs: Increased by 21%, driven by fuel price increases.

• Warning! GuruFocus has detected 6 Warning Signs with DUBRF.

Release Date: August 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Globaltrans Investment PLC (LSE:GLTR) managed to improve its empty run ratio for gondolas to 32%, which helps reduce operational costs.
• The company increased its fleet of tank cars in operation, boosting turnover and volumes in the liquids segment.
• Despite market challenges, Globaltrans Investment PLC (LSE:GLTR) maintained stable pricing for its rolling stock compared to the end of 2023.
• Adjusted EBITDA increased by 9% compared to the first half of 2023, indicating improved profitability.
• The company's net debt is negative, standing at minus RUB50 billion as of June 30, 2024, reflecting strong financial health.

Negative Points

• Freight turnover and transportation volumes in the rail freight market declined by 6% and 3% respectively, impacting Globaltrans Investment PLC (LSE:GLTR)'s operations.
• The railcar turnaround time increased significantly, negatively affecting the number of trips per railcar and operational efficiency.
• The company experienced an 8% decline in consolidated revenue year-on-year for the first half of 2024.
• Operating cash costs increased by 6% due to inflationary pressures, particularly in repair and maintenance expenses.
• The Board of Directors decided to terminate the dividend policy, with no foreseeable resumption of regular dividend payments.

Q & A Highlights

Q: The volumes and turnover of Globaltrans went down deeper than the market overall. Why is that? A: Valery Shpakov, CEO: The decline in our operating indicators was due to operational difficulties in the railroad system, including increased railcar turnaround time and infrastructure restrictions. Additionally, we reduced our fleet of leased gondolas due to unfavorable terms, impacting our operational metrics.

Q: What trends do you expect in the second half of the year, and what prospects do you see for overcoming operational difficulties? A: Valery Shpakov, CEO: The market situation is serious, with ongoing infrastructure issues affecting operations. We expect the downward trend in gondolas to persist, driven by volatility in commodity markets. Overcoming these challenges quickly seems unlikely.

Q: Can we expect the company to resume dividend payments in the future? A: Valery Shpakov, CEO: The Board has decided to terminate the dividend policy as we do not see the possibility of resuming regular dividend payments in the foreseeable future due to the inability to accommodate all shareholders across jurisdictions.

Q: How did the company manage to reduce the empty run ratio for gondolas to 32%? A: Valery Shpakov, CEO: We improved the empty run ratio by optimizing routes, loading containers into gondolas, and leveraging an extended cargo base. This focus on logistics optimization helps restrain costs amid rising regulated tariffs.

Q: What are the plans for replacing the fleet given the expected retirements between 2025 and 2029? A: Dmitry Frolov, CFO: We are monitoring the market closely. Current railcar prices are high, and given operational challenges, we haven't decided on acquiring new fleets yet. We will continue to track market trends before making investment decisions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.