PORT operator International Container Terminal Services Inc. (ICTSI) saw profits eroding in the first quarter of 2016 due to lower storage and ancillary revenues, unfavorable container volume mix, lower capitalized borrowing cost, higher depreciation and amortization expenses and start-up costs of new terminals and projects.
The listed company controlled by billionaire Enrique K. Razon registered a net profit of $45.1 million (P2.07 billion) during the first quarter of the year, about 21 percent lower than the $56.8 million (P2.6 billion) booked the year before, as revenues declined to $266.5 million, a decrease of 10 percent from the $296.1 million in 2015. The decrease in revenues was mainly due to unfavorable container volume mix, lower storage and ancillary revenues, and unfavorable translation impact of the depreciation of local currencies to the US dollar at certain terminals.
But the decline in gross revenues was tapered by tariff-rate adjustments and new contracts with shipping lines and services at certain terminals, and the continuing ramp-up at ICTSI Iraq.
ICTSI handled a consolidated volume of 2,053,639 twenty-foot equivalent units (TEUs) for the quarter ended March 31, 2016, four percent more than the 1,982,773 TEUs handled in the same period in 2015.
The increase in volume was mainly due to the acquisition of new shipping line customers and services at the Company’s terminals in Guayaquil, Ecuador, Manzanillo, Mexico, and Karachi, Pakistan; continuing ramp-up at ICTSI Iraq; and improvement in trade activities at the Company’s terminals in Jakarta, Indonesia and most Philippine ports.
Consolidated cash-operating expenses in the first quarter of 2016 was 15 percent lower at $101.5 million compared to $119.7 million in the same period in 2015. The reduction in cash operating expenses was mainly driven by lower costs of repairs and maintenance and equipment rental at certain terminals; lower fuel costs as a result of the lower global prices of fuel and operational efficiencies; lower variable costs at ICTSI Oregon; and the favorable translation impact to the US dollar of the Brazilian, Mexican and Philippine terminals’ local currency expenses.
The decline in cash operating expenses, however, was tapered by the expense contributions and start-up costs of new terminals and projects in Argentina, Australia, Democratic Republic of Congo, and Laguna in southern Philippines.