ICTSI net income up 4% in first three quarters

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ICTSI net income up 4% in first three quarters
Manila North Harbour Port (also known as NorthPort) photo from ICTSI.
  • International Container Terminal Services, Inc. posted a 4% growth in net income attributable to equity holders in the first nine months of the year
  • Throughput grew 7% to 9.45 million TEUs
  • Revenues increased 7% to $1.76 billion
  • Quarterly EBITDA and net income are at all-time highs

International Container Terminal Services, Inc. (ICTSI) posted a 4% growth in net income attributable to equity holders of $484.54 million for the nine months of 2023 from $465.13 million in the same period last year, based on its latest unaudited consolidated financial results.

In a statement, the company attributed the increase to higher operating income and interest income and lower COVID-19-related expenses. The income was partially tapered by non-recurring impairment of goodwill attributed to Pakistan International Container Terminal (PICT) in the previous quarter and increases in depreciation and amortization, interest on loans, lease liabilities and concession rights payable. Excluding the impairment of goodwill, net income attributable to equity holders would have grown 6% to $495.15 million.

Revenue from port operations rose 7% to $1.76 billion from $1.64 billion in the same period in 2022. The improvement is mainly due to the contribution of  Manila North Harbour Port, Inc. (MNHPI) and new businesses at IRB Logistica in Brazil; tariff adjustments, volume growth and higher revenues from ancillary services and general cargo business at certain terminals; and favorable translation impact mainly of Mexican Peso (MXN)- and Iraqi Dinar (IQD)- based revenues at Contecon Manzanillo S.A. (CMSA) and ICTSI Iraq, respectively, and Brazilian Reais (BRL)- based revenues at Tecon Suape S.A. (TSSA) and ICTSI Rio in Brazil.

A slowdown in trade activities at Victoria International Container Terminal (VICT) in Melbourne, Australia, and the expiration of the concession contract at PICT; and unfavorable translation impact mainly of Philippine Peso (PHP)-, Australian Dollars (AUD)- and Nigerian Naira (NGN)- based revenues at Philippine terminals, VICT in Australia and International Container Terminal Services Nigeria Ltd. (ICTSI Nigeria) in Port of Onne, Nigeria, respectively, tempered revenues.

Excluding the contribution of MNHPI, and impact of new and discontinued businesses, consolidated gross revenues would have increased by 5% for the nine months ended September 30, 2023.

For the third quarter of 2023 alone, gross revenues rose 3% from $576.70 million to $594.88 million.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was at US$1.11 billion for the first three quarters, 7% higher than the $1.04 billion generated in the same period last year.

Diluted earnings per share increased 6% to $0.227 in 2023 from $0.215 in 2022.

The “excellent results were delivered against some very strong prior year comparatives,” said Enrique K. Razon, Jr., ICTSI chairman and president.

“Looking ahead, whilst we continue to expect a challenging macro-economic and geo-political environment, we remain confident in the resilience of ICTSI’s diverse portfolio.  Our strategy as an independent port operator supported by our cost and operational discipline means we are well-positioned for the rest of the year, as well as over the longer term,” he added.

For the quarter ended September 30, 2023, revenue from port operations increased 3% from $576.70 million to $594.88 million; EBITDA was 3% higher at $377.85 million from $365.85 million; and net income attributable to equity holders marginally increased to $170.74 million from $170.66 million in the same period in 2022.  Diluted earnings per share for the third quarter of 2022 and 2023 were flat at $0.080.

Volume growth

ICTSI handled consolidated volume of 9,451,912 twenty-foot equivalent units (TEUs) in the first nine months of 2023, 7% more compared to the 8,856,303 TEUs handled in the same period in 2022.  The increase in consolidated volume was mainly due to the contribution of MNHPI in Manila that was consolidated starting September 2022, and new services at certain terminals.

The volume growth was tapered mainly by the impact of the expiration of concession contract at PICT in Karachi, Pakistan; cessation of cargo-handling operations at Makassar Terminal Services (MTS) in Makassar, Indonesia and Davao Integrated Port and Stevedoring Services Corporation (DIPSSCOR) in Davao, Philippines; and slowdown in trade activities at certain terminals.

Excluding the contribution of MNHPI, PICT, MTS and DIPSSCOR, consolidated volume would have increased by 1%.  For the quarter ended September 30, 2023, total consolidated throughput was 2% higher at 3,176,076 TEUs compared to 3,103,721 TEUs in 2022.

Consolidated cash operating expenses in the first nine months of 2023 was 12% higher at $489.14 million from US$438.13 million in 2022. The increase was mainly due to the costs contribution of MNHPI and of new businesses at IRB Logistica; government-mandated and contracted salary rate adjustments; increase in repairs and maintenance; volume-driven increase in contracted services; increases in professional fees, transportation and travel expenses mainly related to business development activities; and unfavorable foreign exchange effect mainly of MXN-based expenses at CMSA.

The increase was partially tapered by the expiration of the concession contract at PICT, and termination of cargo handling operations at DIPSSCOR and MTS; decrease in power costs; continuous cost optimization measures implemented; and favorable foreign exchange effect mainly of Philippine Peso (PHP)-, Pakistani Rupee (PKR)- and Nigerian Naira (NGN)- based expenses at Philippine terminals, PICT and ICTSI Nigeria, respectively.  Excluding the contribution of MNHPI, and cost associated with new and discontinued businesses, consolidated cash operating expenses would have increased by 10%.

Consolidated financing charges and other expenses increased 1% to $132.68 million for the first nine months ended September 30, 2023 from $130.83 million in 2022 mainly due to higher interest and financing charges on short-term and long-term loan availments and a nonrecurring impairment of goodwill attributed to PICT.  This was partially offset by lower Covid 19-related expenses.

Capex

Capital expenditures, excluding capitalized borrowing costs, amounted to $233.58 million for the first nine months of 2023. These were mainly for ongoing expansions and acquisition of equipment at CMSA in Manzanillo, Mexico, Manila International Container Terminal (MICT) in the Philippines , VICT in Melbourne, Australia, and ICTSI DR Congo S.A. (IDRC) in Matadi, Democratic Republic of Congo.

The Group’s estimated capital expenditure for 2023 is approximately $400 million.

The estimated capital expenditure will be used mainly for ongoing expansion at the Company’s terminals in Mexico, Australia, Philippines and Democratic Republic of Congo; second tranche of concession extension-related expenditures in Madagascar; yard expansion at ICTSNL in Nigeria; quay expansion at ICTSI Rio in Brazil; development of a recently acquired terminal in East Java in Indonesia; equipment acquisitions and upgrades; and for capital maintenance requirements.

ICTSI is a leading global developer, manager and operator of container terminals in the 50,000 to 3.5 million TEU/year range operating in six continents.

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