Letter from the Chair of the Board of Directors
2020 was a challenging year for all of us. The COVID-19 pandemic caused a global economic turmoil of enormous proportions. In the face of this tough external environment, FESCO Transportation Group demonstrated strong resilience and flexibility in adapting to changing circumstances.
Despite a 3.1% decline in Russia’s GDP in 2020, the container market surged by over 10% YoY, with FESCO’s revenue and market share growing ahead of the market. We expect even stronger performance in 2021.
The revised structure of FESCO’s share capital will help guarantee stable development, with the newly elected Board of Directors ensuring high-quality strategic management in the interests of all stakeholders.
Our new executive management team headed by Arkady Korostelev is keen to maintain professional continuity and develop the existing best practices, while also bringing in an extra degree of dynamism and renewal to the Company.
Mr Korostelev has previously worked at FESCO as Vice President for Commerce and has a solid understanding of the industry and the Company.
All of these changes have strengthened our corporate integration. Closer interaction between FESCO business units creates synergies as evidenced by the success of the Commercial Port of Vladivostok ("PJSC VMTP", "VMTP", the "Port", "Vladivostok Port"). Russia’s largest port in terms of container handling, VMTP continues to deliver exceptional operating and financial results.
Despite the economic shocks of 2020, FESCO carries on with its ambitious strategy to become an intermodal transportation leader.
Since mid-2020, we were in talks with VTB, our main financial partner, to refinance the Company’s debt. I am happy to report that this year, we have successfully completed the negotiations, securing a significant interest rate reduction and decrease in our quarterly payment, making it very comfortable for the Group. This will provide a sufficient liquidity cushion for FESCO. We have also made arrangements for opening credit facilities to finance our new investment projects.
Mutually beneficial partnerships with major transportation market players is key to long-term business success. Therefore, we are glad to see Rosatom as our new strategic partner.
All of these positive changes coincided with the 140th anniversary of Far-Eastern Shipping Company, the Group's core asset. We are very happy that the long and glorious history of one of Russia’s oldest private companies continues.
FESCO is grateful to our partners for trusting and supporting us despite all the difficulties. We would also like to thank our teammates who continued to provide superior service to our clients while facing the pandemic-related restrictions and challenges of the remote work.
I am confident that we have a bright future ahead of us.
Chair of the Board of Directors