VTG announces solid half-year results

The Hamburg-based wagon hire and rail logistics company VTG Aktiengesellschaft (SCI: VTG999) continued its stable performance in the first six months of 2009 despite the difficult market environment. Revenue, at EUR 287.3 million, dropped by only 3.7 percent compared with the figure for the previous year of EUR 298.3 million. Operating profit (EBITDA) fell by only 3.1 percent to EUR 75.4 million. Cash flow from operating activities increased to EUR 77.4 million, representing a sharp rise of 11.5 percent. For the financial year as a whole, the company expects revenue and EBITDA to drop only around five percent compared to the previous year.

“VTG is a solid company which has been only slightly impacted by the general economic situation. We have prepared ourselves for this by taking timely measures to secure operating profit“, says Dr. Heiko Fischer, CEO of VTG Aktiengesellschaft. “When the economy starts to pick up again, we will then be able to push on seamlessly with our international growth strategy.”

Wagon Hire Division performance stable as expected
As the leading wagon hire company in Europe, VTG has a wide range of wagons for nearly every branch of industry. Companies integrate these wagons over the long term into their logistics chains to secure their production processes. The capacity utilization of VTG’s wagons – which total around 49,400 – was around 88.9 percent, despite the weak economic climate. A proportion of returned wagons can still be hired out again and most newly-built wagons are being hired out directly. Thus, capacity utilization is still being maintained at a high level after the record levels of 2008 and fell only slightly compared with 31 March 2009 (90.0 percent).

Revenue in the first six months of 2009 fell slightly from EUR 143.4 million to EUR 141.0 million, a drop of 1.6 percent. EBITDA, at EUR 74.3 million, remained at much the same level as for the same period of the previous year (EUR 75.0 million). The EBITDA margin related to revenue was also at the level of the previous year, 52.7 percent.

Rail Logistics Division reports rise in revenue
As a leading rail logistics operator with a Europe-wide network of haulage partners, this division benefited in particular from positive growth in cross-border block train transports to and from eastern and south-eastern Europe as well as from transports of liquefied petroleum gas. This offset the decline in demand for chemical transports. At the same time, however, competition among rail forwarders has intensified.
In the first six months of 2009, revenue in Rail Logistics rose against the previous year by 5.2 percent, reaching EUR 91.2 million. EBITDA amounted to EUR 3.3 million, a similar level to the previous year. The EBITDA margin on gross profit fell from its 2008 level of 48.1 percent to 41.9 percent.

Demand in Tank Container Logistics Division stabilizes at a lower level
The focus of the Tank Container Logistics Division is on the supply chains of the global chemical industry and the division is therefore being affected significantly by the international economic crisis. The order situation has stabilized over the second quarter, albeit at a low volume. While the high transport capacities remain unchanged, the pressure on prices has increased. However, cost reduction measures, particularly the ongoing return of tank containers hired from third parties, have limited the narrowing of profit margins.

There was a significant drop in revenue in the first six months of 2009.  The fall from EUR 68.1 million to EUR 55.1 million represented a decline of 19.2 percent. EBITDA fell by 30.2 percent to EUR 3.2 million. The decline in the EBITDA margin on gross profit from 43.0 percent to 38.9 percent was limited due to stringent cost management measures.

Outlook: stable development of business despite strained economic situation
Despite the slowing down in the downturn of the global economy in the second quarter, VTG does not expect a rapid economic recovery. From this perspective, the market environment will remain just as difficult for the rest of 2009. VTG expects to be able to pay a dividend for this financial year. In Wagon Hire and Rail Logistics, the development of business will be slightly weaker, while in Tank Container Logistics the company expects the lower level of demand to continue. The flexible measures introduced by the company to secure operating profit in all divisions are already having an impact. These include the scaling down of investments, which, at EUR 54.1 million, are already down by 32.5 percent on the previous year. Overall, for the year 2009, the Group expects a drop of around five percent in both revenue and EBITDA.

Source: Transportweekly