2GO sails into P312M profit from 5-year losses

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2GO sails into P312M profit from 5-year losses
MV 2GO Masagana. Photo from 2GO Group, Inc.
2GO Group’s net income reached P312 million in 2022, a turnaround from the 2021 net loss of P1.14 billion
• First annual profit since 2017 was propelled by focus on profitable services and customers as market conditions improved, and cost controls to drive scale and efficiencies
• Revenue rose 25% as all business bounced, except distribution

2GO Group Inc. and its subsidiaries sailed into a P312-million net income in 2022, a turnaround from the net loss of P1.14 billion in 2021 and the company’s first annual profit since 2017.

The positive performance was spurred by a focus on profitable services and customers amid improving market conditions, and continued cost controls to drive scale and efficiencies, the end-to-end logistics service provider said in a regulatory disclosure.

Revenue rose 25% to P19.27 billion in 2022 from P15.41 billion in 2021 while operating costs increased 15% year on year.

Shipping revenue, comprising sea freight and passenger travel, surged 67% y-o-y while sea freight revenue alone climbed 48%.

Revenue from passenger travel rose 217% y-o-y while revenue from logistics and other services climbed 30% y-o-y from steady growth of 2GO’s cold chain reefers and ISO tank containers, forwarding, ecommerce fulfilment, and international courier business.

Revenue from the distribution business fell 10% y-o-y as 2GO focused on profitable principals.

Shipping accounted for 33% and non-shipping for 67%, compared with 25% and 75%, respectively, in 2021.

The cost of services and goods sold escalated 18% due to higher volumes for shipping and certain logistics services, but this was offset by 14% lower cost of goods sold for the distribution business.

Fuel costs increased 46% y-o-y while general and administrative expenses fell 23% due to continued focus on cost controls and lower provisions for doubtful accounts.

2GO, a subsidiary of SM Investments Corp. (SMIC), provides integrated transport and logistics services with five business units: 2GO Sea Solutions, 2GO Special Containers, 2GO Logistics, 2GO Express, and 2GO Distribution.

In February, SMIC said it was set to offer as many as 378.817 million common shares of 2GO to take the group private.

As of December 2022, 2GO and its subsidiaries owned and operated a fleet of nine vessels, consisting of eight roll-on/roll-off/passenger (ro-ro/pax) vessels and one freighter. Its fleet has a combined gross registered tonnage of 126,695, total annual passenger capacity of about 2illion passengers, and aggregate annual cargo capacity of around 300,000 twenty-foot equivalent units.

Currently, five ro-ro/pax vessels call at Manila as their homeport. Three medium-sized vessels call at Batangas as their homeport and ply the Batangas-Caticlan-Odiongan and the Batangas-Romblon-Roxas routes. 2GO also operates one purely-cargo vessel, with Manila as its homeport, to complement its freight business.