On 21 January 2013 the Board of Directors of JSC TransContainer approved the strategy of the Company until 2020. The Board confirmed that the strategic goal of the Company is to increase capitalisation by means of improving the scale and efficiency of its business as well as confirmed the business model of the Company as a vertically integrated provider of container transportation and logistics solutions.
Container Market Growth in Russia
The strategy of the Company is based on the expected long-term growth of the container market in Russia and the CIS driven by fundamental factors, such as the low container penetration ratio as compared to the developed markets, the continuing growth of the economy and consumer demand, as well as a further increase in industrial production of value-added products.
The strategy envisages maintaining the leading positions of TransContainer in the growing container transportation market, further optimisation of terminal handling business based on the forecast of further development of TransContainers cargo base and the continuing write off of medium duty containers from the Russian Railways network, as well as further development of the integrated freight forwarding and logistics business. The strategy indicates the Companys measures to further improve operational efficiency.
Possible Acquisitions to be Made
While the strategy is based on the organic growth of the Company in the key markets of Russia and the CIS it does not exclude the possibility of new acquisitions in other markets should the acquisition be economically efficient and create material synergies for the Company.
Under the base case scenario the updated strategy assumes the stable growth of profitability, an increase in container transportation volumes up to 2.7 million TEU in 2020, with the flatcar fleet increasing to 42 thousand units and the share of logistics and freight forwarding services increasing to up to 50% of revenue.
Expand and Improve Rolling Stock
To achieve these goals the Company plans to invest 20% to 30% of net revenue annually in capital expenditure with the total accumulated CAPEX reaching up to 110 billion rubles (ca. US$ 3.6 billion at the exchange rate set by the Central Bank of Russia as of 22 January 2013) by 2020. The major component of this expenditure will be on the expansion and improvement of the Companys rolling stock.
The Board believes the new strategy will serve to strengthen the leadership of JSC TransContainer in the container transportation market and secure sustainable growth of the Companys value for the benefit of its shareholders.
