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Globaltrans Boosts Dividend With Freight-Rail Volume Set to Grow

Globaltrans Investment Plc (GLTR), a Russian freight rail operator listed in London, plans to increase its dividend payout for 2012 by 26 percent even as profit declined because of acquisitions.

Net income fell to $258 million from $266 million in 2011 as financing costs because of after Globaltrans’s acquisition of a rail unit from billionaire Alisher Usmanov’s Metalloinvest, the company said in a statement. Revenue rose 22 percent to $2.1 billion.

Globaltrans’s board recommended paying 2012 dividends of 70 cents a share or global depositary receipt, for a total of $125 million compared with $99 million a year earlier, according to a separate statement. The company paid 64 cents a share on 2011 profit, and has since issued new stock.

The rail company’s stock jumped as much as 8.9 percent in London, trading up 4.3 percent at $14.79 by 11:17 a.m.

Along with Neftetransservice and billionaire Vladimir Lisin, Globaltrans has been buying rail freight assets to expand its presence in the Russian market. Last month, the company completed a $335 million acquisition of MMK-Trans, which owns 3,500 railcars serving steelmaker OAO Magnitogorsk Iron & Steel. (MMK)

“The current market environment may well be a catalyst for further consolidation,” Globaltrans said today in the statement. “Smaller rail operators are increasingly deprived of access to premium cargo bases as well as being impacted by recent market headwinds.”

Unlike Russian Railways, which had a 4.8 percent decline in cargo volume in the the first two months of 2013, Globaltrans increased freight rail turnover 35 percent in January through February this year as it acquired fleets from Metalloinvest and MMK, according to the company’s statement.

Steelmakers OAO Severstal (SVST) and OAO Mechel (MTLR) haven’t yet sold their captive rail freight carriers, Globaltrans Chief Executive Officer Sergey Maltsev said by phone today, when asked what remains to be acquired in the Russian market.

Cargo volume at Russian Railways is unlikely to grow in March as this month has been abnormally cold and snowy, hurting business for scrap-metal processors and producers of gravel and sand, Maltsev said.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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