Chelsea Logistics and Infrastructure Holdings Corp (CLC) posted a net loss of P345 million for the first quarter of 2020 from a net profit of P139 million in the same period last year, primarily due to economic fallout of the coronavirus (COVID-19) disease.
The drop in net profit was also due to CLC’s share in the net loss of associates DITO Telecommunity and 2GO Group, Inc. totaling P133 million, the company said in a disclosure to the Philippine Stock Exchange.
Revenues slightly increased by 1% to P1.61 billion in the first quarter of 2020 from P1.60 billion in the same period last year. CLC said this was despite the imposition of the enhanced community quarantine (ECQ), which significantly caused a slowdown in operations starting March 15, and which coincidentally is the start of the shipping industry’s peak season.
Tankering revenues (consisting of charter fees and standby charges) declined 24% to P401 million from P527 million as a result of the unscheduled downtime of MT Chelsea Providence, the group’s medium-range tanker, for the whole month of January.
Similarly, revenues from the freight segment dropped 1% to P517 million from P522 million, while passage revenues rose 39% to P413 million from P296 million. CLC said the growth in passage revenues can be attributed to the consolidation of The Supercat Fast Ferry Corporation, which it acquired in October 2019.
Tugboat fees increased 6% to P86 million in the first three months of 2020 from P82 million in the same period last year due to higher number of moves during the period.
The logistics business, which accounts for 7% of the total consolidated revenues, posted a 10% decline to P106 million in the first quarter of this year from P118 million year-on-year. This was due to the slowdown in movement of goods from land, air and sea transport restrictions to and from Luzon, brought about by the Taal volcano eruption in January as well as the COVID-19 pandemic during the quarter.
Cost of sales and services grew 25% to P1.256 billion in the first quarter of 2020 from P1.008 billion in the same period last year. CLC said significant drivers to the increase were bunkering costs, and depreciation and amortization, which grew by P191 million and P72 million, respectively, as a result of additional vessel deployments for the period.
On the other hand, there was a significant drop in outside services and charter hire fees as a result of the slowdown in the group’s operations as a result of the ECQ.
CLC in an earlier statement said it has been in talks with possible partners with overseas operations while implementing strategic plans to navigate through uncertainties brought about by the COVID-19 pandemic.
“These discussions are still on the initial stages and we will disclose further details once plans are more definite. We are overly cautious on this matter as we wanted to enter into a partnership that will not only bring in financial investments, but also bring in expertise, best practices and value to the overall business,” CLC president and chief executive officer Chryss Alfonsus V. Damuy said.
In addition, the group is considering synergies with its existing services in tankering, tugboat assist and freight services.
CLC said it is also undergoing workforce rationalization to restructure support functions and right-size existing workforce; slashing planned capital expenditures; and disposing of aging and underperforming vessels due to the effects of the pandemic.
As to upcoming infrastructure projects, namely the Davao Sasa Port and Davao Airport modernization projects, the group sees its revenues coming from shares from terminal fees, airport concessions, cargo handling and stevedoring, and docking charges.
CLC last year was granted the original proponent status for its unsolicited proposal to modernize Davao Sasa Port, while the National Economic and Development Authority Investment Coordination Committee has approved the unsolicited operate-add-transfer proposal by Chelsea for Davao International Airport.