Page 69 - GEORptNov21

by home and furnishing materials with an 8% share in 2020.
Food delivery earned a special niche in Georgia’s digital buying ecosystem as Georgian retailers used food delivery channels to deliver grocery, personal care and pharmaceutical products during the pandemic. This is contrary to developed markets, where retailers have their own in-house delivery services. We estimate the food delivery sector turnover at GEL 167mn in 2020 up 3x from 2019, with grocery and personal care products accounting for 20% of the total. Whether retailers will stick with this third-party delivery scheme or invest in their own delivery channel depends on different factors, including availability of financial and human resources.
We estimate cross-border e-commerce spending at GEL 459mn in Georgia in 2020, having grown at an average annual rate of 40.3% over 2018-20. The four largest foreign online platforms – Amazon, eBay, Taobao and Aliexpress – command 2/3 of total cross-border purchases but face increasing competition from small market players in apparel, accessory, beauty and cosmetic retail sectors. International online retailers attract customers with their low prices, large product variety and superior user experience, offsetting the disadvantages of their long delivery time and additional shipping charges.
9.2 Major corporate news 9.2.1 Transport corporate news
Liquid cargo back on track for Georgian Railway in H1
Georgian Railway has released its audited H1 results. Investment bank Galt&Taggart assessed the outcome.
The company generated $83.6mn (+3.4% y/y) in revenue and $38.2mn (+3.3% y/y) in adjusted EBITDA in H1. Growth was mostly driven by increased revenue from the sale of scrap (+$3.3mn) as well as higher freight transportation revenue (+$1.6mn).
Also in H1, GR managed to bring back liquid cargo transportation volumes. They hit the highest level seen in six years. GR transported 2.1mn tons of oil products in H1, up 46.7% y/y, boosted by transportation volumes from Turkmenistan and Azerbaijan.
On a negative note, GR’s dry cargo transportation, which makes up 65% of total transportation volumes, declined by 3.2% y/y in H1. Passenger transportation, which was the hardest hit revenue category for GR during the pandemic, remained under restrictions for some part of Q1, however positive trends were observed from Q2. Furthermore, freight handling and freight car rental, which together accounted for 20% of 2020 revenue, continued declining in 1H, down 15.8% y/y to $13.0mn.
GR maintained strong profitability margins, with adjusted EBITDA margin standing at 45.7% in H1. Yield on GR’s new green eurobond has been declining, standing at 3.7% by October 7. Notably, the spread vs sovereign GEORGIA 26 declined from around 150bps in the summer months to around 120bp by end-September.
9.2.2 Aviation corporate news
More airlines resume flights to Batumi on Georgia’s Black Sea coast
Kazakh carrier Air Astana carried out its first Almaty-Batumi direct flight on May 15.
The airline will be carrying out three flights a week from Kazakhstan's largest city to the Georgian Black Sea coast holiday destination using an Airbus 320 during the summer.
69 GEORGIA Country Report November 2021 www.intellinews.com