“The idea was to sell the older tonnage and to modernize the whole fleet,” LSC chairperson Doris Magsaysay Ho said in the company’s annual stockholders’ meeting on Thursday.
The company said it has replaced three ships with new ones since 2008, with the M/V Lorcon Davao as the latest to be sold.
“When we sold Lorcon Davao, it was already at scrap value. She was already 40 years old… We have already replaced three very old vessels in the past five years. We’ve replaced Lorcon Mindanao, Lorcon Luzon, Lorcon Davao with younger vessels,” LSC president Roberto Umali said.
Umali said the company does not have a target date for the completion for fleet modernization. LSC has seven vessels.
He also said capital expenditure will focus on vessel machinery, spare parts, land-based equipment and especially containers.
“We are improving our containerships. Modernizing… (We want more) food-grade containers,” Umali said.
Asked by a shareholder how LSC fares vis-á-vis competitor 2GO, Umali said: “We don’t feel much threatened but, at the same time, we have to watch what our competition is doing.”
He said 2GO has a different type of business, catering more to passengers, while LSC is in containers.
“They are in the passenger market, so they have their own struggles and problems. We have our own challenges. So far the markets remain stable,” Umali said.
He explained that the company is watching small rising competitors “who might be so aggressive in bringing down the rates just to get volumes and expand their market shares.”
“Maybe in the short term they (small rising competitors) will be able to get some cargoes, but we resist bringing down our rates just to respond to (a) freight war. So far, we are happy to maintain our profitability and it’s better in 2012 and we hope to do better in 2013,” Umali said.
LSC had a sound fiscal year in 2012 with revenues rising 6.98% to P1.84 billion from P1.72 billion a year earlier and net income soaring 458.49% to P62.39 million from P11.17 million in 2011. However, revenues for the first quarter of the year dropped 12.37% to P398.8 million from P455.06 million a year ago and net income falling 54.39% to P7.26 million from P15.92 million.
In the first quarter of the year, the company implemented the SVM LRP/ARP © Liner and Agency Resources Planning system (SAIL System) that provides real-time operation data. The company is also planning “to convert to e-commerce by the end of the year” that will enable customers to book their cargoes online.
Umali said he does not see spectacular growth this year, just a stable one but noted LSC’s general outlook for this year and the next three years is positive.
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