NCSP Group (MCX: NMTP) is Russia's largest stevedoring operator. The group includes the ports of Novorossiysk, Primorsk and Baltiysk. The company is engaged in loading and unloading operations, provides service and logistics services, operates oil and passenger terminals. The main shareholder of the company is Transneft.
1 April NCSP released consolidated financial statements based on the results of 2020 of the year. Despite the publication date, The results weren't very funny..
Position in the industry
NCSP provides various port services, related to loading, Unloading, storage and clearance of goods, which are imported or exported from Russia. The company's income directly depends on the volume of cargo turnover, passing through controlled ports.
IN 2020 year, trade between the countries declined amid the coronavirus pandemic and the introduction of restrictive measures. This led to a drop in the operating and financial performance of Russian port operators, including NCSP.
Total cargo turnover NCSP fell on 22% year to year - before 110,6 million tons. The weak result was due to a drop in crude oil transshipment volumes by 32% year on year against the background of the crisis in the hydrocarbon industry and the restrictive agreement on oil production between OPEC+ countries.
Dynamics of cargo turnover of NCSP, million tons
| 2016 | 146,9 |
| 2017 | 143,5 |
| 2018 | 140,2 |
| 2019 | 142,5 |
| 2020 | 110,6 |
2016
146,9
2017
143,5
2018
140,2
2019
142,5
2020
110,6
Financial results
Revenue. The decrease in cargo turnover in ports led to a drop in revenue by 19% year to year - before 45,6 billion rubles. At the same time, operating expenses, excluding depreciation, increased by 4% - to 16 billion rubles — due to the increase in personnel costs. Less work, but it is necessary to maintain infrastructure and pay salaries.
Operating profit fell on 34% year to year - before 23,7 billion rubles.
Financial expenses managed to reduce 20% year to year - before 4,6 billion rubles — due to lower payments on loans and borrowings: interest rates fell, and loans have declined..
Against the backdrop of the devaluation of the ruble, NCSP suffered a non-cash loss from foreign exchange differences in the amount of 8,8 billion rubles - against profit in the amount of 6,5 billion rubles in 2019 year. Most of the company's loans are denominated in US dollars, therefore, currency fluctuations lead to a revaluation of this debt in rubles.
There is one more factor, which affected the financial results of the company, — sale of the grain terminal to VTB structures in May 2019 years over 35,5 billion rubles. Unfortunately, the asset cannot be sold twice.
Net profit NCSP collapsed in 12,6 times a year to a year 4,8 billion rubles. If we subtract from the results the effect of revaluation of exchange rates and a one-time profit from the sale of the terminal, then net profit fell by 47%. This is essential, but it doesn't look so bad anymore.
Dynamics of financial indicators, billion rubles
| Revenue | Operating profit | Net profit | |
|---|---|---|---|
| 2016 | 58 | 40,2 | 42,4 |
| 2017 | 52,5 | 33,1 | 25,6 |
| 2018 | 59,7 | 36,6 | 16,8 |
| 2019 | 56,1 | 36,1 | 61 |
| 2020 | 45,6 | 23,7 | 4,8 |
Revenue
2016
58
2017
52,5
2018
59,7
2019
56,1
2020
45,6
Operating profit
2016
40,2
2017
33,1
2018
36,6
2019
36,1
2020
23,7
Net profit
2016
42,4
2017
25,6
2018
16,8
2019
61
2020
4,8
Debts
The total debt of NCSP, taking into account obligations under lease agreements, decreased by 12% year on year and amounted to 44,5 billion rubles. At the same time, the company's net debt increased by 27% - to 30,4 billion rubles — due to a decrease in the amount of money and their equivalents in the accounts.
Based on the results of 2019 year, the company's accounts accumulated a record amount after the sale of the grain terminal. And in 2020 the business paid out a substantial portion of this amount in the form of dividends to its shareholders, declaring a record dividend in its history. It was a one time stock against the backdrop of the sale of a major asset, and you should not expect the same generosity from management in the near future.
The level of the holding's debt load according to the ratio "net debt / EBITDA increased from 0,6 to 1 due to rising net debt and falling EBITDA amid record low revenue from stevedoring services.
After growth amid the crisis, the company's debt load looks quite low, and the financial stability of the business, nothing should threaten.
Net debt dynamics, billion rubles
| 2016 | 70,1 |
| 2017 | 61,7 |
| 2018 | 57,7 |
| 2019 | 24 |
| 2020 | 30,4 |
2016
70,1
2017
61,7
2018
57,7
2019
24
2020
30,4
Dynamics of the ratio "net debt / EBITDA»
| 2016 | 1,7 |
| 2017 | 1,6 |
| 2018 | 1,3 |
| 2019 | 0,6 |
| 2020 | 1 |
2016
1,7
2017
1,6
2018
1,3
2019
0,6
2020
1
Dividends
In the development strategy, which management introduced at the beginning of last year, marked landmark by dividend: it was planned to allocate at least 50% from IFRS net profit for the reporting period. If we approach this landmark formally, then shareholders can expect at least 13 kopecks per share in the form of dividends.
But there is a possibility, that management will adjust earnings for non-recurring and non-cash items, which will increase the total amount of dividends.
Dividend per share
| 2016 | 0 R |
| 2017 | 0,78 R |
| 2018 | 0,5 R |
| 2019 | 1,35 R |
| 2020 | 0,13 R |
2016
0 R
2017
0,78 R
2018
0,5 R
2019
1,35 R
2020
0,13 R
What's the bottom line?
NCSP became a victim of circumstances, which had virtually no effect.. The port infrastructure sector has been hit by a drop in maritime traffic in 2020 year. This led to a drop in cargo turnover and revenue to the lows of recent years.. Net profit plummeted, but, as I noted, a significant part of the decline was caused by one-time and non-monetary factors, so there is no reason to panic.
Against the backdrop of last year's low base in 2021 year company, probably, will demonstrate the growth of operational and financial indicators, but it is unlikely that it will be able to quickly return to pre-crisis levels. OPEC + restrictions are gradually eased, but at least until May 2022 years will be valid. But in the income of NCSP, the transshipment of crude oil occupies a significant share.
Since the second half of the year, trade turnover has been recovering on world markets against the background of the gradual lifting of restrictive measures. Vaccination of the population is actively underway, which means, you can count on, that the epidemiological situation in developed and developing countries will return to normal.
Russia is a major market and an important link in trade between Asian and European countries, therefore, ports in the Black and Baltic Seas are of great economic and strategic importance. Not surprising, that the government of the Russian Federation has a "golden share" of NCSP, which allows the state to veto any significant decision of the management and the controlling shareholder.
