UPDATE: FESCO says unreasonable to restart dividend payments

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MOSCOW, Aug 3 (PRIME) -- Russia’s Far-Eastern Shipping Company (FESCO) should reinvest profit, not restart dividend payments, CEO Andrei Severilov told PRIME in an interview on Thursday.

“As CEO, I personally think that it would be unreasonable to distribute any dividends and that we need to allocate the entire net profit to investment. The board of directors recommends that as well. We have room for growth,” he said.

“This issue is not on the agenda. The current times call for purchases of fixed assets. We need to continue expanding our assets so that we continue our extensive growth and development.”

He also said that FESCO was looking into acquisition of port infrastructure assets in Egypt and that the company may attract a local partner to do so.

The company will launch a direct shipping service from Novorossiysk to Egypt in November, and is also preparing to open its office in the country.

“In Egypt, we are looking at (the acquisition of) one of the ventures in the sphere of port infrastructure, and we will most likely need an Egyptian partner to do it,” Severilov said.

It is unclear whether the company will invest money in port infrastructure, and is too early to disclose any details of the possible deal, he said.

Also, FESCO is ready to transport the Lada cars of Russia’s largest carmaker AvtoVAZ to Africa.

“Our colleagues from AvtoVAZ will obviously have to find their market and their clients, but I am sure that they will succeed in that. On our side, we are ready to help them if there is a firm order for transportation. We are ready to acquire any ships for that and car carriers for transportation,” he said.

He said that FESCO had asked the Russian Academy of Sciences (RAS) for an expert opinion on the nature of working in Africa.

“This is a new market for us outside Egypt, it is largely unknown, but economy of the countries there is rather expansive, and we are sure of the growth opportunities. We asked the Institute for African Studies of the RAS to draft an expert opinion on the key questions,” he said.

“Our scientific colleagues will help us in defining classification and amounts of cargoes, ports, and competitors, and they will consult us on the political issues and aspects of working with some countries.”

FESCO may invest in a Russian transport and logistics center in the East of Africa as suggested by President Vladimir Putin during a recent Russia–Africa summit.

“We understand, accept, and support this suggestion absolutely. On our side, we may express an opinion that we could consider placement of a similar center in Egypt as well because it provides great opportunities for further transit of goods throughout the continent judging by the size of its economy and its geographical placement,” he said, adding that the company would be interested in investing in a East African logistics center.

He also said that the company was waiting for retailers to provide guaranteed amounts of cargoes prior to launching cargo routes between Russia and Latin America.

“We are interested in this region right now. It has cargoes that we understand in the amounts that we understand, but it would be difficult to consolidate cargo consumers. We want to receive guaranteed cargo volumes from retailers to open a direct line, but we are unable to shake hands right now,” Sobolev said.

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