• Throughput increased 5% to 10.2 million TEUs
• Revenues grew 7% to USD1.5 billion
• EBITDA improved 10% to USD830.1 million
Enrique K. Razon, Jr., Chairman of ICTSI said: “ICTSI delivered a positive performance in 2019 with revenue and EBITDA increasing by 7% and 10%, respectively. Recurring net income was USD259.1 million up 23% compared to the previous year but owing to the one-off non-cash impairment of the concession right assets of Tecplata S.A which we revalued in light of prolonged difficult economic conditions in Argentina, net income fell.
“The outbreak of COVID-19 has had an impact on volumes particularly in Asia and we are closely reviewing developments across the regions in which we operate. Whilst we cannot be certain how long this situation will last; we are seeking to mitigate this impact through rigourous cost control and increasing market share. ICTSI is an agile business and able to act swiftly to ensure the business remains robust during these uncertain times.”
International Container Terminal Services, Inc. (ICTSI) today reported audited consolidated financial results for 2019 posting revenue from port operations of USD1.5 billion, an increase of seven percent over the USD1.4 billion reported in 2018; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of USD830.1 million was 10 percent higher than the USD755.4 million generated in 2018; and Net income attributable to equity holders of to USD100.4 million, down 52% compared to the USD207.5 million earned last year. Diluted earnings per share declined 71 percent at USD0.020 from USD0.071 in 2018. Excluding these non-recurring gains and charges, recurring net income in 2019 was 23 percent higher at USD259.1 million compared to the USD210.5 million earned the previous year.
In 2019, the Company recognized non-recurring charges totaling USD158.7 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 USD156.0 million due to lower projected cash flows on its updated business plan as a result of the prevailing and challenging economic conditions in Argentina. In addition, the Company also booked a USD2.7 million charge on acceleration of debt issue cost brought about by the partial prepayment of the Company’s Euro-denominated term loan. In 2018, the Company recognized a non-recurring gain of USD2.8 million due to the termination of the interest rate swap brought about by the prepayment of the Project Finance loan in Contecon Manzanillo S.A., the Company’s container terminal in Manzanillo, Mexico and a USD5.8 million non-recurring impairment charge on the goodwill at its terminal in Davao, Philippines.
ICTSI handled consolidated volume of 10,178,018 twenty-foot equivalent units (TEU) in 2019, five percent more than the 9,736,621 TEUs handled in 2018. The increase in volume was mainly due to continuing ramp-up at ICTSI’s new terminals in Lae and Motukea in Papua New Guinea and the contribution of the new terminal in Rio de Janeiro in Brazil; improvement in trade activities in Subic, Philippines, Matadi, Democratic Republic of Congo and Basra, Iraq; new contracts with shipping lines and services at Victoria International Container Terminal (VICT) in Melbourne, Australia, Baltic Container Terminal (BCT) in Gdynia Poland, Adriatic Gate Container Terminal (AGCT) in Rijeka, Croatia, Batumi International Container Terminal (BICT) in Batumi, Georgia and Contecon Manzanillo S.A. (CMSA) in Manzanillo, Mexico.
Gross revenues from port operations in 2019 increased seven percent to USD1.5 billion compared to USD1.4 billion reported in 2018. The increase in revenues was mainly due to volume growth; tariff adjustments at certain terminals; new contracts with shipping lines and services; higher revenues from ancillary services; and the contribution from the Company’s new terminals in Lae and Motukea in Papua New Guinea, and Rio De Janeiro in Brazil.
Consolidated cash operating expenses in 2019 was three percent higher at USD464.2 million compared to USD452.2 million in 2018. The increase in cash operating expenses was mainly due to higher volume; government-mandated and contracted salary rate adjustments at certain terminals; unfavorable translation impact of Philippine Peso expenses at Philippine terminals; and the cost contribution of the new terminals in Lae and Motukea in Papua New Guinea and in Rio de Janeiro in Brazil. This was partially tapered by continuous monitoring of cost optimization measures and favorable translation impact of Pakistani Rupee expenses at Karachi, Pakistan, Australian dollar expenses at Melbourne, Australia and Brazilian Reais expenses at Suape, Brazil.
Consolidated EBITDA for 2019 increased 10 percent to USD830.1 million from USD755.4 million in 2018 mainly due to strong revenue growth and minimal cash operating expense increase. Consequently, EBITDA margin increased to 56 percent in 2019 from 55 percent in 2018.
Consolidated financing charges and other expenses for 2019 increased by 121 percent from USD128.6 million in 2018 to USD284.0 million in 2019 primarily due to the impairment charges at its subsidiary in Buenos Aires, Argentina.
Capital expenditures for 2019 excluding capitalized borrowing costs amounted to USD240.8 million, approximately 63 percent of the USD380.0 million capital expenditures budget for the year. The Group’s capital expenditure budget for 2020 is approximately USD270 million. The estimated capital expenditure budget will be utilized mainly for the ongoing expansion projects at Manila International Container Terminal (MICT) in Manila, Philippines and CMSA in Mexico; yard expansion at IDRC in Democratic Republic of Congo; equipment acquisitions and upgrades; and for maintenance requirements.