Georgian Railway - 1H23 update
Georgian Railway continued to deliver positive results in 1H23, albeit at a slower pace. The company’s revenue grew 15.6% y/y to US$ 117.7mn, primarily fueled by revenues generated from freight traffic, logistic services and passenger traffic. Despite this, the EBITDA witnessed a 19.3% y/y decline to US$ 34.9mn in 1H23, driven by a surge in operating expenses, particularly influenced by rising employee benefits, and GEL appreciation. Consequently, the EBITDA margin for the period marked a notable decrease to 29.7%, from 42.5% in 1H22.
Cargo volumes remained at elevated levels in 1H23 reducing by just 2.4% y/y to 6.7mn tons. This reduction was primarily attributed to a 5.9% y/y decrease in transit volumes, mostly stemming from the reduced transportation from Kazakhstan and Turkmenistan. Notably, liquid cargo played a vital role in maintaining steady volumes of total cargo transported in 1H23, registering an 8.9% y/y growth to 2.4mn tons, while dry cargo exhibited 7.9% y/y decline to 4.2mn tons. For the full 2023 year, we expect revenue growth to moderate and increase by 4.7% y/y to US$ 242.3mn, considering last year’s high base.