Chelsea Logistics and Infrastructure Holdings Corporation (CLC) is right sizing its workforce and slashing planned capital expenditures, among other strategies, in response to the coronavirus (COVID-19) pandemic.
While all of Chelsea’s business segments showed significant growth in the first two months of 2020, the company said this momentum was interrupted by the COVID-19 pandemic, which caused a slowdown in business activities.
“The COVID-19 pandemic has affected almost all industries all over the world and we are not an exception. The shipping industry has been severely affected by the ECQ [enhanced community quarantine] and GCQ [general community quarantine], and unfortunately this coincided with the industry’s peak season,” Chelsea president and chief executive officer Chryss Alfonsus V. Damuy said in a statement.
In response, Chelsea said it immediately revisited future strategies, including strengthening its balance sheet and aggressive fixed asset management by slashing planned capital expenditures and disposing of aging and underperforming vessels.
With there’s limited shipping operations during the community quarantine, Chelsea said it has intensified its logistics services to cater to other products from its previous norm, such as transporting fast-moving consumer goods and medical supplies across the country.
The group’s logistics arm, Worklink Services, Inc., continues to address the demand and requirements for logistics services, particularly for specialized and efficient delivery service.
Chelsea said it “is now poised to take advantage of the opportunities in sectors with positive and resilient economic outlook, including e-commerce which is seen to grow four times in the next five years and infrastructure projects related to the Government’s Build, Build, Build Program.”
It added that the group is also engaged in industries vital to the Philippine economy such as logistics, a fast-growing sector in the country.
As for 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.
Chelsea last year was granted 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.
Damuy said the group has been in talks with possible partners with operations overseas which the company foresees to bring value to the business considering their wide experience in shipping.
“These discussions are still in 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,” added Damuy.
In addition, the group is considering synergies with existing services in tankering, tugboat assist and freight services.
Chelsea chief financial officer Ignacia S. Braga IV said the company is experiencing birth pains with recent investments even as it is working on synergies across its operations.
As the group’s businesses are capital intensive, it takes time, usually years, to prepare and introduce various services to the market, and only then do cashflows gradually come in for these projects, he said.
“While we’re focused on building our core businesses, we can see in the recent earnings report that core income has been starting to solidify and will continue to grow in the coming years. We do not immediately get to reap the rewards from our investments and hard work. We are yet to realize the full potential of these projects as they are still in the infancy stage.” Braga said.
Chelsea has yet to release its full year 2019 and first quarter 2020 financial report.