DGAP-News: VTG AG

VTG reports uptrend in second quarter of 2017

- Revenue and Group net profit up sequentially

- Railcar capacity utilization improved

- Revenue increase at Rail Logistics

- Earnings per share up year on year

- Continuing investment to enlarge fleet

- Revenue forecast confirmed - EBITDA forecast for 2017 adjusted

Hamburg, August 29, 2017. VTG Aktiengesellschaft (WKN: VTG999), one of the leading railcar leasing and rail logistics companies in Europe, saw an uptrend in the second quarter of 2017. Compared to the first quarter of the current financial year, Group revenue increased by 4.6 percent to EUR 255.0 million. EBITDA was up 13.3 percent to EUR 86.7 million. Positive development was also evident compared to the same quarter a year ago, with revenue 2.2 percent higher (Q2 2016: EUR 249.5 million) and EBITDA up 2.9 percent (Q2 2016: EUR 84.2 million). Despite a rather weak start to the year in the first quarter, Group net profit of EUR 27.5 million for the first half of 2017 marked an improvement on the same period of the previous year (EUR 26.7 million). Earnings per share (EPS) likewise rose from EUR 0.71 in the first half of 2016 to EUR 0.74 in the period under review. This positive trend in the first half of 2017 was attributable primarily to second-quarter gains in revenue and earnings at the Railcar and Rail Logistics divisions.

"In the second quarter, our business benefited from sustained positive economic development. After a modest start to the year, we are now experiencing substantially higher demand for our wagons," explains Dr. Heiko Fischer, Chairman of the Executive Board of VTG AG. "All in all, we have achieved a good result for the first half-year. Growing demand strengthens our will to continue investing in our business and our fleet, as we have done with recent acquisitions in Russia and the US, and as we plan to do with the takeover of the NACCO Group."

Railcar: Capacity utilization up - First-half revenue in 2017 practically unchanged year on year
The Railcar Division posted revenue of EUR 128.5 million in the second quarter of 2017, 2.3 percent more than in the previous quarter (EUR 125.6 million). This gain was almost sufficient to offset the weaker start to the year. Halfway through the financial year, revenue of EUR 254.1 million thus remains virtually unchanged from the same period a year ago (EUR 254.7 million). This development is due to stronger demand for intermodal wagons and a positive trend in the North American and Russian markets. In the first half of 2017, capacity utilization for the entire fleet thus rose to 91.2 percent (first half of 2016: 90.1 percent). Second-quarter EBITDA of EUR 86.4 million was 13.3 percent higher than the figure of EUR 76.2 million reported in the first quarter. However, that was not enough to fully compensate for high maintenance and wheelset expenses in the first quarter of 2017. Accordingly, EBITDA of EUR 162.6 million at mid-point in the financial year was slightly below the figure of EUR 165.5 million recorded a year ago.

Sequentially, the EBITDA margin improved, from 60.7 percent in the first quarter of 2017 to 67.2 percent in the second quarter. Comparison shows that the first-half EBITDA margin of 64.0 percent was only slightly down on that of the first half of 2016 (65.0 percent).

Capital expenditure totaled EUR 150.8 million in the first half of 2017, more than in the same period a year ago (EUR 102.9 million). Most of this money was channeled into expansion of the fleet in North America and Russia, above all through the acquisition of used wagons. Compared to the same period a year ago, investment in the construction of new wagons was stepped up in Europe.

Rail Logistics: Higher revenue and EBITDA in the first half
Tank Container Logistics: Strong euro a burden on earnings
The Rail Logistics Division saw revenue increase to EUR 166.6 million in the first half of 2017, a gain of 7.1 percent (first half of 2016: EUR 155.6 million). Key reasons for this positive development were successful business expansion in Southern Europe, a rise in consignments carried for the metalworking industry and the acquisition of new business in the Project Logistics unit. As a result, the division's EBITDA climbed noticeably to EUR 3.3 million in the period under review (first half of 2016: EUR 2.6 million). The EBITDA margin for Rail Logistics, which is based on gross profit, thus improved from 18.7 percent in the first six months of 2016 to 22.2 percent in the first half of 2017.

Within the Tank Container Logistics Division, due to the strong euro, first-half revenue of EUR 78.1 million was 5.9 percent down on the same period a year ago (EUR 83.0 million). Additionally, shifts in transport streams had a negative impact on realizable margins. Still, since Tank Container Logistics Division was able to maintain its higher transportation volume in the second quarter of 2017, the picture halfway through the year continues to reflect pleasing development year on year. The increase was particularly strong in overseas and intra-Asian business. Both the strength of the euro and this margin effect weighed on EBITDA, which declined by 11.6 percent from EUR 5.8 million in the first half of 2016 to EUR 5.1 million in the six months under review. The EBITDA margin, which is based on gross profit, thus fell in the same period by 3.4 percentage points to 34.7 percent (first half of 2016: 38.1 percent).

Revenue forecast confirmed - EBITDA forecast for 2017 adjusted
On August 17, 2017, the Executive Board of VTG AG adjusted the EBITDA forecast for the current year. Accordingly, Group EBITDA in a corridor from EUR 330 million to EUR 360 million is now expected for the 2017 financial year. The previous forecast had anticipated a slight increase on the prior year's Group EBITDA of EUR 345.3 million. This adjustment was made essentially on the basis of three factors:

First, VTG's European wagon hire activities at the start of the third quarter reflect unusually strong demand for freight cars, and we are servicing this demand by refurbishing around 1,100 wagons that were previously unlet. Making temporarily sidelined wagons ready for operation initially incurs what are effectively start-up costs. At the present time, the Executive Board of VTG AG is working on the assumption of an extra charge of around EUR 4.0 million.

Second, technical changes to certain braking systems were resolved under the guidance of the European Railway Agency (ERA) at the start of August of this year. These changes will improve safety in rail freight transportation and will lead to a one-off charge of around EUR 2.5 million in 2017.

Third, the Executive Board's adjusted forecast factors in possible effects on earnings arising from the planned takeover of NACCO. Depending on the timing of the antitrust authorities' expected approval, this may result in profit contributions in the current financial year (if a positive decision comes early) or additional charges (if the decision comes later).

The Executive Board's revenue forecast remains unchanged and still anticipates a slightly higher figure than in the previous year (2016: EUR 986.9 million).

About VTG:

VTG Aktiengesellschaft is one of Europe's leading railcar leasing and rail logistics companies, with a fleet of more than 80,000 railcars. VTG is a full-service provider, supplying tank cars, standard freight cars, intermodal cars and sliding-wall railcars. Beyond its leasing activities, the Group delivers a comprehensive portfolio of multimodal logistics service focused primarily on rail freight and global tank container transportation.

With the combination of its three interlinked divisions Railcar, Rail Logistics and Tank Container Logistics, VTG offers its customers a high-performance platform for international transport of their freight. The Group has many years of experience and specific expertise, in particular in the transport of liquid and sensitive goods. Its customers include numerous well-known companies from almost every industrial sector, for example the chemical, petroleum, automotive, paper and agricultural industries.

In the financial year 2016, VTG generated revenue of EUR 987 million and operating profit (EBITDA) of EUR 345 million. Via its subsidiaries and affiliates the company, which has its head office in Hamburg, is mainly present in Europe, North America, Russia and Asia. As at 31 December 2016, VTG had 1,443 employees worldwide in consolidated companies. VTG AG is listed on the official Prime Standard market of the Frankfurt Stock Exchange and also on the SDAX (WKN: VTG999).

Press contact:
Gunilla Pendt
Head of Corporate Communications
Telephone: +49 (0) 40 23 54-1341
Fax: +49 (0) 40 23 54-1340
E-mail: gunilla.pendt@vtg.com

Investor relations contact:
Christoph Marx
Head of Investor Relations
Telephone: +49 (0) 40 23 54-1351
Fax: +49 (0) 40 23 54-1350
E-mail: christoph.marx@vtg.com

More information at www.vtg.com