International Container Terminal Services (ICTSI) has released solid results for 2018. The port and terminal operator, which is headquartered in Manila, Philippines, had an up-up-up 2018 compared to 2017. ICTSI’s box volumes were higher, revenues increased and the group generated higher profit.
The Philippines allows companies to report on any 12 month basis; most companies chose March or December as the year end, says professional services company PwC.
ICTSI, which is listed on the Philippine Stock Exchange, recorded consolidated box volumes of 9.8 million twenty-foot equivalent units (TEU), up by six percent from the 2017 figure of 9.1 million TEU. Revenues from port operations rose 11 percent to US$$1.4 billion, up from $1.2 billion in 2017. Earnings before interest, tax, depreciation and amortization (EBITDA) grew 11 percent to $642.2 million, up from the previous year’s figure of $578 million. Net income rose 20 percent to $249.8 million from the 2017 figure of $207.7 million.
Commenting on the results, Enrique Razon, the chairman of ICTSI (who owns 62 percent of the company’s shares), said: “I am pleased to report strong full year operating results for 2018. Our drive to maintain positive volume growth organically and through M&A, our focus on cost and operating efficiency, and the constructive global trade dynamics outside of the U.S.-China ‘trade war’ combine to provide a case for cautious optimism in 2019.”
ICTSI largely attributed its 2018 results to organic growth in volumes and revenues. Volumes particularly grew in Asia, up by nine percent, from 4.82 million TEU in 2017 to 5.24 million TEU in 2018. Revenue from Asian operations grew 17 percent, from $591 million in 2017 to $694 million in 2018.
Organic volume and revenue growth was driven by new contracts with shipping lines and services along with tariff adjustments. Growth was also driven by new containerized cargo, storage and ancillary storage business. There was also a contribution to revenues from new terminals in Lae and Motukea, Papua New Guinea, and Melbourne, Australia. Consolidated EBITDA grew 11 percent mainly due to strong revenue growth from the Papuan terminals.
ICTSI pointed to a variety of factors that were a drag on its net income. These included a share in losses at a joint venture box terminal in Colombia; a “high fixed lease” at Melbourne; and a non-recurring impairment charge on goodwill at its terminal in Davao, Philippines, in 2018. Operating expenses included an increase in the price of fuel; high fuel consumption to service higher volumes; and equipment rentals. Costs were partially offset by non-recurring gains at terminals around the world, continuous monitoring of expenses and favorable currency conversions. The group also reduced its financing charges by three percent by paying down debt and lower restructuring costs.
“Excluding the new terminals, consolidated cash operating expenses would have increased by only three percent in 2018,” the company said.
The group’s balance sheet looks solid. It has $4.7 billion of total assets on hand, of which $447 million are cash and cash equivalents. That compares to a total debt of $2.5 billion. The company gives its debt coverage service ratio as 3.42. A figure of “1” would mean that the company has enough net operating income to cover all of the annual debt payments. A figure of 3.42 means that it can comfortably cover its annual debt payments, even with declines in cash flow.
Founded in 1987 to bid for the Manila terminal concession, ICTSI is listed on the Philippine Stock Exchange. It operates 30 terminals around the world, of which it fully owns 16. It has part-ownership of the other 14. It operates 10 terminals in the Philippines, six terminals in other parts of Asia, seven in “Europe, Middle East, Africa” and seven in Latin America.
