Georgian Railway’s revenue stood at $ 184.7 in 2023- Galt&Taggart

Georgian Railway’s revenue was up 11.9% y/y to US$ 184.7 in 9M23. Growth was driven by increased revenues from logistic services (+28.9% y/y) and passenger traffic (+89.5% y/y), while the freight traffic revenues (67.5% of total) was up only 2.8% y/y to US$ 124.6mn in 9M23. On the other hand, Georgian Railway’s operating expenses surged by 30.6% y/y to US$ 145.9mn, driven by 39.2% y/y growth of employee benefits. The surge in operating expenses led to a 15.1% y/y decline in EBITDA to US$ 62.3mn in 9M23. Consequently, the EBITDA margin stood at 33.7% in 9M23 vs. 44.5% in 9M22.

The volume of cargo transportation was down 5.9% y/y to 10.3mn tons in 9M23, reflecting last year’s high base. This reduction was primarily attributed to an 11.4% y/y decline in dry cargo transportation (63.9% of total cargo) to 6.6mn tons in 9M23. However, liquid cargo transportation (36.1% of total cargo) was up 5.6% y/y to 3.7mn tons, partially mitigating the decline in dry cargo. In FY23, we expect revenues to reach US$ 245mn and cargo volumes to total 13.8mn tons.

Georgian Railway’s operating expenses surged by 30.6% y/y to US$ 145.9mn, mostly influenced by elevated employee benefits (up by 39.2% y/y to US$ 67.5mn) and GEL appreciation in 9M23 (expenses are mostly GEL-denominated). Salary expenses made up almost half (46.2%) of total expenses, followed by electricity, consumables and maintenance costs (14.8% of total), depreciation (14.4% of total), logistic service charges (11.6% of total) and other costs (12.9% of total) in 9M23.

The surge in operating expenses led to a 15.1% y/y decline in EBITDA to US$ 62.3mn in 9M23. Consequently, the EBITDA margin for the period stood at 33.7% in 9M23 vs. 44.5% in 9M22.

Net profit was down by 57.9% y/y to US$ 39.4mn in 9M23. This notable reduction 1) stemmed from a decrease in FX gain and 2) a surge in operating expenses. Consequently, net profit margin stood at 21.3% in 9M23 vs. 56.7% in 9M22.

The volume of transported cargo was down 5.9% y/y to 10.3mn tons in 9M23, reflecting last year’s high base. Notably, transportation volumes in 9M23 were 13.3% higher compared to volumes in 9M21.

Transit (57.8% of total cargo) was down 8.3% y/y to 5.9mn tons in 9M23. Majority of cargoes originated from Azerbaijan (25%), Kazakhstan (22%) and Turkmenistan (19%) in 9M23. In terms of cargo, petroleum products, urea and sugar accounted for majority of transit transportation.

Import (22.2% of total cargo), was up 3.8% y/y to 2.3mn tons in 9M23. Majority of imported cargo originated from Russia (54%), followed by Azerbaijan (23%) in 9M23. Main imported cargoes were petroleum products (up 7.6% y/y to 0.9mn tons) and cement clinkers (up 19.9% y/y to 0.3mn tons) in 9M23.