Successful year for VTG

ON THE RIGHT TRACK

RESULTS • VTG REPORTS ON A LARGELY SUCCESSFUL 2018, WITH RISING DEMAND IN ALL ITS OPERATING DIVISIONS. 2019 PROMISES SOME CHANGES, BOTH IN OPERATIONS AND SHAREHOLDING

VTG AG HAS reported unaudited 2018 revenues of €1.07bn, up 5.7 per cent on the previous year, largely due to what it describes as “dynamic development” in its Railcar Division, where fleet capacity utilisation hit 93.5 per cent by year-end, the highest level for ten years.

EBITDA for the year came in at €349.3m, up 1.7 per cent on the 2017 figure; that increase would have been 7.9 per cent but for two onetime charges related to the takeover of Nacco and the public takeover bid by Warwick Holding.

“The unaudited result shows that our takeover of Nacco was the right move, an important step in the long-term development of the company,” says Dr Heiko Fischer, chairman of the Executive Board of VTG AG. “Although the cost of the transaction placed a burden on Group profit, we are already seeing confirmation that we have strengthened our position for the long-term future. We are confident that we will be able to continue this positive trend in 2019, too.”

Increasing demand and the expansion of the rail fleet following the Nacco acquisition pushed revenue in the Railcar Division up 11.4 per cent to €579.9m, with EBITDA up 11 per cent at €381.4m. The Rail Logistics Division fared less well, after the loss of two major orders, a rail strike in France and a shortage of engine drivers. Revenue fell 3.6 per cent to €324.5m and EBITDA was off by 22 per cent at €6.5m.

Volumes were well up in the Tank Container Logistics Division, pushing revenue ahead by 6.9 per cent to €168.2m, but changes in product flows left equipment underutilised, raising demurrage and empty tank repositioning costs. Growing demand in Europe was welcome, but worsening infrastructure bottlenecks in both road and rail transport added yet further to demurrage and freight costs. As a result, the Division’s EBITDA fell 42.3 per cent to €6.5m.

A YEAR OF CHANGE VTG expects the coming year to be better. Despite a loss of momentum in European economies, fundamentals remain solid. Furthermore, a cut in track prices for railfreight traffic in Germany is expected to provide a positive stimulus. Moreoever, VTG will enjoy the first full year contribution from the acquired Nacco assets and costs related to the transaction will be lower. Full-year EBITDA is forecast to be in the range of €480m to €510m.

In addition, VTG has submitted an application to delist its shares from the Frankfurt Stock Exchange. This follows a voluntary offer from Warwick Holding GmbH, an affiliate of Morgan Stanley Infrastructure, which currently owns some 71 per cent of VTG. Warwick Holding will support a rights offering, to partly refinance an outstanding bond, and will acquire all shares not subscribed in the offering. The delisting is a condition of this offer.

Warwick Holding has said that it “assures the support for the course set by VTG” and, to the extent legally possible, will aim to keep an independent chairman and at least two independent members on the supervisory board until the end of the shareholders’ meeting in 2022. It has also committed to keep Hamburg as the statutory and administrative seat of VTG until at least June 2029, something that, Dr Fischer says, “gives us planning security for the future”.

The delisting was expected to take place this month. HCB www.vtg.com