Listed company 2Go Group, Inc. forecasts a 25% hike in net income to P1.1 billion in 2015 from P880 million in 2014, the boost to come from the growth of its logistics and shipping services.
Company revenue is likewise seen to increase 14.3% to P16 billion this year from P14 billion in 2014, 2Go chief executive officer and president Sulficio Tagud, Jr. told reporters on the sidelines of their stockholders’ meeting on July 10.
Tagud said they foresee positive performance from the group’s logistics, distribution, and courier express businesses, as well as a 5% to 6% improvement in the shipping business. 2Go has been reporting a profit since 2013 after reversing a loss of P365 million in 2012 through improvements in efficiency and business growth from the integration with Negros Navigation Co., Inc.
Capital expenditure for this year is up 89% to P850 million from P450 million last year. Of the total, P700 million has been set aside for the acquisition of three new vessels—one ropax vessel and two fast ferries—to replace existing ones servicing major routes as part of its fleet modernization. The remaining P150 million is allocated for minor expenditures and retrofitting of warehouses that 2Go leases.
Tagud said they are scouting for passenger vessels aged 12 to 18 years old so as to bring down the current fleet age average of 28 years old to 25 years old, and “hopefully 18 years old later.” 2Go is also looking at a ropax with capacity of 1,500 passengers and 170-180 containers.
The target is to buy vessels in the second half of 2015 and deploy them in the second quarter of next year. Tagud said they are not thinking of buying bigger ships considering the “condition of our ports.”
The shipping line executive said this year has been very good so far and promises to be “a lot better than last year” after the resolution of port congestion, triggered by the daytime truck ban imposed by the Manila city government in Feb 2014. “The continuing challenge is the poor conditions of our ports which make it expensive for shipping companies to upgrade,” Tagud said.
2Go’s current fleet consists of eight ropax vessels, seven cargo ships, and eight fast ferries deployed on 24 major routes. Two vessels have been dry docked and two more are scheduled for dry docking within the second half of the year.
Meanwhile, retrofitting of existing warehouses is being done in anticipation of the expansion of retail convenience stores in major provinces across the country, including Cagayan de Oro, Davao, Iloilo, and Bacolod.
“We’re positioning ourselves in terms of forward stock locations for the small warehouses in order to ensure quick response to requirement to deliver and refill the shelves of retailers,” Tagud said.
He added that 2Go expects its logistics business to grow 10% to 12% next year and “a significant portion of that will be accounted for by our positioning to serve the expanding retail convenience.”
Meanwhile, asked about port congestion in Iloilo, Tagud said “it might even be better to skip” the area for more frequent calls to other ports to avoid waiting at anchorage which now could stretch up to 10 days.
There are reports of berthing issues in Iloilo ports that have led to congestion. Domestic container lines are threatening to skip Iloilo altogether if the issue is not resolved soon.
2GO’s businesses are ton freight, passage, international logistics, and value-added services. Units include 2Go Freight, 2Go Travel; 2Go Supply Chain; 2Go Express, Inc.; Hapag-Lloyd Philippines, Inc.; Hansa Meyer Projects, Inc.; 2Go Logistics, Inc.; Scanasia Overseas, Inc.; Kerry Logistics (Philippines), Inc.; WRR Trucking Corp.; The Supercat Fast Ferry Corp.; NN-ATS Logistics Management & Holding, Co., Inc.; and Special Container and Value Added Services, Inc. Moreover, 2Go owns shares in MCC Transport Philippines, Inc.
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
