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Logistics services

One of the Group’s strategic objectives is a transition from the provision of pure transportation services to offering comprehensive door-to-door services by expanding the range of rendered 2PL, 3PL, 4PL services and the formation of global logistics chains.

Operational results of GEFCO, an international logistics company

In order to strengthen the position of the Company in the logistics market and to implement 3PL/4PL logistics technologies within the Russian railways network, the Company acquired a 75% share of GEFCO, a French logistics operator, in 2012. GEFCO is one of the leading players in the European market of logistics services and enjoys a leading position in the logistics services segment for the European automobile market.

In 2013, the acquired company was actively integrated into the structure of the Group, with significant opportunities and development potential for the logistics business in Russia and the CIS countries. During 2013, a number of activities were carried out to form a package offer of logistics services for large Russian and foreign industrial enterprises.

An early project involving GEFCO is a joint operation of the Group and the Evraz Group. The project will offer corridor services for cargo delivery to Europe, specifically to the Vitkovice Steel factory in the Czech Republic, using the Ust-Luga-Sassnitz railway-ferry crossing. As part of the integration of GEFCO into the business of the Group, a pilot project was carried out aimed at using the competencies of GEFCO in providing the internal logistics of Russian Railways to procure spare parts supply for locomotive maintenance.

Consolidated revenue of GEFCO in 2013 amounted to EUR 3,991 million, 10.8% higher than in 2012. At the same time, a gradual decline in the proportion of revenue attributable to the Peugeot Citroen Group should be noted. Prior to the acquisition by Russian Railways, the Peugeot Citroen Group was GEFCO’s main shareholder and its key client. The change of GEFCO business structure is taking place against a background of an increase in the volume of services rendered to market customers. GEFCO business development in Russia and the provision of services by Russian Railways will allow us to diversify the client base even more, as well as to increase the Company’s scale of business.

Despite extensive work on the integration of GEFCO into the Group and the development of new markets the economic situation in Europe, its main operating market, only started to stabilise in 2013. Against a backdrop of  relatively unfavourable economic conditions, GEFCO was still able to achieve its planned profit indicators in 2013 due to the implementation of its expenses optimisation programme. Improvement in Europe’s macroeconomic situation and the realisation of synergies with Russian Railways and its companies will allow us to achieve further performance improvements.

By the end of 2013, the operational profit of GEFCO totalled EUR 95.5 mlm, with net profit at EUR 55 mlm, corresponding to planned targets. A strategic development plan for GEFCO until 2020 that also incorporates the company’s prospects in the markets of Russia and the CIS countries provides for average consolidated sales increase of 6-7% per year.

Operational results of OJSC RZD Logistics

In general, 2013 was characterised by a negative economic situation. Despite this OJSC RZD Logistics (hereinafter “RZDL”) enjoyed a revenue of RUB 5,177 million, reaching an increase of 28% compared to 2012. In general, the operating margin of the Company in 2013 was 10%.

Main activities of RZDL in 2013