International Container Terminal Services, Inc. (ICTSI) reported audited consolidated financial results for the year ended 31 December 2017, posting revenue from port operations of US$1.244 billion, 10 percent higher compared to US$1.128 billion in 2016; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$578.0 million, 10 percent better than the US$525.1 million generated the previous year; and net income attributable to equity holders of US$182.1 million, up one percent compared to the US$180.0 million earned last year. Fully diluted earnings per share for the period was up six percent to US$0.069 from US$0.065 in 2016.
The increase in net income was mainly due to the continuing ramp-up at the company’s new terminal in Matadi, Democratic Republic of the Congo (DRC); strong operating results from the terminals in Iraq, Mexico, Honduras, Madagascar, China, Poland and Brazil; and the gain related to the termination of the sub-concession agreement in Lagos, Nigeria.
The increase, however, was tapered by higher interest and financing charges, higher depreciation and amortization expenses, start-up costs at the company’s terminal in Melbourne, Australia, and increase in the company’s share in the net loss at Sociedad Puerto Industrial Aguadulce S.A. (SPIA), its joint venture container terminal project with PSA International Pte Ltd. (PSA) in Buenaventura, Colombia, which increased from US$5.6 million in 2016 to US$36.7 million for the same period in 2017 as the company started full commercial operations at the beginning of the year. Excluding the gain of US$7.5 million on the termination of the sub-concession agreement in Nigeria in 2017 and the charge of US$23.4 million on the pre-termination of the lease agreement at ICTSI Oregon, Inc., the company’s terminal in Portland, Oregon, USA in 2016, consolidated net income attributable to equity holders would have declined by 14 percent in 2017.
ICTSI handled consolidated volume of 9,153,458 twenty-foot equivalent units (TEUs) in 2017, five percent more than the 8,689,363 TEUs handled in 2016. The increase in volume was primarily due to continuing improvement in global trade activities particularly in the emerging markets, continuing ramp-up at ICTSI’s operations in Basra, Iraq, new services at Manzanillo, Mexico and contribution of new terminals in Matadi, DRC and Melbourne, Australia. Excluding the new terminals, consolidated volume would have increased by four percent.
Gross revenues from port operations in 2017 increased 10 percent to US$1.244 billion from US$1.128 billion the previous year. The increase in revenues was mainly due to higher volume, tariff rate adjustments at certain terminals, new contracts and services with shipping lines, and the contribution from the company’s new terminals in Matadi, DRC and Melbourne, Australia. Organically, consolidated gross revenues increased by seven percent.
Consolidated cash operating expenses in 2017 was 13 percent higher at US$475.9 million compared to US$419.6 million in 2016. The increase in cash operating expenses was mainly due to the cost contribution of the new terminal operations in Matadi, DRC and Melbourne, Australia, higher throughput, increase in fuel prices and power rates at certain terminals, and unfavorable translation impact of the BRL appreciation in Suape, Brazil. The increase was tapered by the additional benefits of the on-going group-wide cost optimization initiatives and the favorable translation impact of Philippine Peso denominated expenses at the various terminals in the Philippines.
Consolidated EBITDA for 2017 increased 10 percent to US$578.0 million, from US$525.1 million in 2016 mainly due to strong operating results from the terminals in Iraq, Mexico, Honduras, Madagascar, China, Poland and Brazil, combined with the additional benefits of the on-going group-wide cost optimization initiatives, and positive contribution of the new terminal in Matadi, DRC tapered by start-up costs and fixed port lease expense at Melbourne, Australia. EBITDA margin, on the other hand, slightly decreased to 46.4 percent in 2017 from 46.5 percent in 2016.
Capital expenditures, net of capitalized borrowing costs and other expenses, amounted to US$174.8 million, approximately 73 percent of the US$240.0 million capital expenditure budget for 2017. The capital expenditure was mainly to fund the completion of the initial stage development of the company’s greenfield projects in DRC and Iraq; the second stage development of the company’s project in Australia; continuing development of the company’s container terminals in Mexico and Honduras; and capacity expansion in its terminal operations in Manila. In addition, ICTSI invested US$25.0 million in the development of SPIA.
The Group’s capital expenditure budget for 2018 is approximately US$380.0 million mainly allocated for the capacity expansion in its terminal operations in Manila, Mexico and Iraq; continuing rehabilitation and development of the company’s container terminal in Honduras; procurement of additional equipment and minor infrastructure works in its newly acquired terminal operations in Papua New Guinea; and the completions of its new barge terminal project in Cavite City, Philippines.
Source: Press Release
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