The Market Monitor Minding the Nation's Business
International port operator International Container Terminal Services Inc. (ICTSI) reported a substantial 68-percent drop in profit to $58.5 million (P2.7 billion) from $182 million (P8.5 billion) for last year mainly due to a one-off expense of $116.2 million (P5.46 billion) in “impairment” charges in its operations in Argentina.
ICTSI posted revenue from port operations of $1.05 billion (P49.35 billion), one percent lower compared to $1.061 billion (P50.9 billion) a year ago; Earnings Before Interest, Taxes, Depreciation and Amortization (Ebitda) of $450.0 million (P21.15 billion), 2 percent higher than the $443.0 million (P20.35 billion) generated the previous year; and reported net income attributable to equity holders of 68 percent lower this year.
Excluding the effect of one-time adjustments to carrying value of certain subsidiaries and non-recurring charges, recurring net income would have increased one percent to $174.7 million from $172.6 million in 2014.
In 2015, the company recognized non-recurring charges totaling $116.2 million composed principally of impairment charges on the concession rights assets of Tecplata S.A. (Tecplata), the Company’s terminal in Buenos Aires, Argentina, amounting to $88.0 million due to lower projected cash flows on its updated business plan as a result of the prevailing and challenging economic conditions in Argentina and the goodwill of subsidiaries PT ICTSI Jasa Prima Tbk and PT OJA in Jakarta, Indonesia, aggregating $26.6 million as a result of lower projected cash flows on its updated business plan than originally expected.
In addition, the company recognized non-recurring gains and charges such as the $300,000 gain on the sale of the terminal in Naha, Japan, the recognition of $1.3 million wealth tax charge on its equity in its project in Aguadulce, Colombia, and $600,000 super tax charge at the terminal in Karachi, Pakistan.
In 2014, the company also recognized gains on the sale of a non-operating subsidiary in Cebu, Philippines, the termination of management contract in Kattupalli, India, the net settlement of the insurance claims in Guayaquil, Ecuador and Gdynia, Poland, the gain on the sale of Yantai Rising Dragon International Container Terminal as part of the consolidation of the terminal operations at the Port of Yantai in Yantai, China and the write-down of intangibles at Tecplata.
Excluding these non-recurring gains and charges, recurring net income in 2015 would have been one percent higher at $174.7 million (P8.2 billion) compared to the $172.6 million (P8.1 billion) earned the previous year.
ICTSI handled consolidated volume of 7,775,993 twenty-foot equivalent units (TEUs) for the year ended December 31, 2015, five percent more than the 7,438,635 TEUs handled in 2014.
The increase in volume was mainly due to the continuing volume ramp-up at Contecon Manzanillo S.A. (CMSA) in Manzanillo, Mexico and Operadora Portuaria Centroamericana, S.A. de C.V. (OPC) in Puerto Cortes, Honduras; new shipping line contracts and services at Pakistan International Container Terminal (PICT) in Karachi, Pakistan and at Contecon Guayaquil S.A. (CGSA) in Guayaquil, Ecuador; increased demand for services at Subic Bay International Terminal Corp. (SBITC) in Subic Bay, Philippines; favorable impact of consolidation at Yantai International Container Terminal (YICT) in Yantai China; and the contribution from ICTSI Iraq, the Company’s new terminal in Umm Qasr, Iraq which began commercial operation in November 2014. Excluding the volume from the new terminal in Iraq, organic volume increased 3 percent.