Georgian Railway - FY22 update
2022 turned out to be an impressive year for GR, with railway transportation volumes marking a substantial increase of 21.8% y/y to 14.8mn tons. As a result, the company generated US$ 231.4mn (+36.1% y/y) in revenue and the highest-ever net profit of US$ 136.1mn in 2022. The surge in revenue was driven by increased freight traffic and logistic service revenue, reflecting growth in dry cargo transportation (particularly sugar, chemicals & fertilizers, etc.). The growth in revenues contributed to a 38.6% y/y growth in company’s EBITDA, totaling US$ 97.5mn in 2022, translating into the strong 42.1% EBITDA margin. This growth was instrumental in reducing the company's net debt to EBITDA ratio from 5.9x in 2021 to 3.9x in 2022.
We expect revenue growth to moderate and increase by 4.7% y/y to US$ 242.3mn in 2023, considering last year’s high base. At the same time, we expect growth in liquid cargo to continue and compensate anticipated decline in dry cargo transportation volumes. The former is based on projected increase in oil product transportation from Kazakhstan through Georgia, aligned with rising demand for oil products domestically and the revival of oil product transit flows from Azerbaijan. Additionally, we forecast EBITDA to stand at US$ 76.8mn, down by 21.2% y/y from last year’s high base, due to increased operating expenses, particularly employee compensation, and appreciation of local currency.