Georgian Railway's Revenue Decreased by 3.3% to $167 Million Last Year

GR’s revenue in 2018 decreased 3.3% y/y to US$ 167.5mn. Significant reduction in freight transportation and logistics service revenues dragged the positive trends in other revenue streams.

Freight transportation revenue, which made up 56.8% of total, was down 9.1% y/y to US$ 95.2mn in 2018. Revenue from logistic services was down 5.7% y/y to US$ 27.7mn. Other revenue streams posted positive results in 2018, with freight handling and car rental revenue growing 1.9% y/y to US$ 20.4mn and 49.6% y/y to US4 10.0mn, respectively. Passenger revenue experienced another strong year, with revenue growing 18.7% y/y to US$ 10.8mn in 2018.

Freight transportation revenue, largest revenue category, continued to decline as a result of reduced freight cargo, particularly liquid cargo. Total freight revenue 
drop was effected by significant drop in oil products transportation.

Crude oil transportation going through Georgia dropped to almost zero (0.16mn tons) in 2018. Resulting transportation revenues also dropped 52.1% y/y to US$ 1.5mn in 2018. Notably, transportation of crude oil from Turkmenistan through Georgia stopped in 2018, while in 2017 its share stood at 23% in total crude oil going through Georgia. 

Revenue from oil products transportation declined 11.4% y/y to US$ 37.9mn in 2018, effecting most GR revenues. Changed destinations were the main reason for 
reduced revenues. Namely, the share of Kazakhstan, more profitable direction, decreased from 34% of total oil products transportation in 2017 to 11% in 2018, while less profitable directions (Azerbaijan, Russia and Turkmenistan) gained the position in the mix (from 45% in 2017 to 66% in 2018). 

Dry cargo transportation volumes were up while revenues declined 5.0% y/y to US$ 55.7mn in 2018. Reduced sugar transportation (down 39.0% y/y to US$ 4.5mn in 2018) effected most this revenue category as tariffs were down and cane sugar transportation (more profitable product) dropped. Meanwhile, the ore products transportation growth (up 10.5% y/y to US$ 11.1mn) partly offset this negative impact.

Freight car rental and passenger traffic revenues increased to US$ 20.8mn in 2018 (up 49.6% y/y and 18.7% y/y, respectively). The former was related to increased usage of the company’s tank cars, open-wagons and grain carriers, by its daughter company. While the latter was effected by increased revenues per person (from GEL 8.5 or US$ 3.4 in 2017 to GEL 9.6 or US$ 3.8 in 2018) as passengers shifted to more profitable, main line, direction.