Philippine domestic liner Lorenzo Shipping Corporation (LSC) posted a widened net loss of P71 million in the first quarter of 2018 compared to its P64 million net loss in the same period last year.
The wider net loss comes after the shipping company reported a 53% reduction in net loss for 2017, saying plans for a turnaround had started to bear fruit.
Revenues for the first three months of the year amounted to P445.6 million, 17% lower than the P542.485 million earned in the same period last year, LSC said in a disclosure to the Philippine Stock Exchange.
Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to P1.5 million, a 91% decline from P16.6 million in 2017. It noted that the decrease in EBITDA was because of the reduction in average freight revenue “which is still due to overcapacity in the market.”
Despite the sale of M/V Lorcon Visayas in October 2017, container volumes handled during the first three months of the year went up 2% versus the same period last year. LSC said this was made possible through improved utilization and routing of vessels, and co-loading arrangements with selected carriers. Industry vessel capacity, however, remained high compared to demand, and generally affected freight, the shipping line noted.
Direct cost shrank by 17% to P463.137 million from P555.955 million in the same period last year. Direct vessel expenses also improved by P20 million compared to the same period in 2017 while trucking expenses went down by 26%.
Fuel expenses, however, went up by 6% with the increase in price of fuel and diesel oil. Cost of repair for land-based equipment and container vans also increased in 2018 with an effort to make the company’s operations more reliable.
General and administrative expenses were almost the same as last year at P43 million.
LSC noted fewer vessel-related incidents in 2018, but said total loss time increased to 28 days due to repairs being done to M/V Lorcon Dumaguete.
The decline in direct costs shows that the company’s turnaround plans are already starting to reap benefits, LSC said.
The company said it will continue its turnaround plans this year, including improving vessel and service reliability, and enhancing partnership with selected carriers for utmost flexibility, especially in cases of excess volumes or service disruptions.
Maximizing vessel capacity through a more competitive pricing scheme, especially for northbound volumes, will also continue to be emphasized.
Significant reduction in operating costs for trucking, terminal, and cargo handling will still be given priority by maintaining a focused and flexible organizational structure and applying appropriate technology.
LSC will also aim to control profit leakage through a focus on reducing claims and improving the billing and collection cycle.
Depending on market conditions, LSC will drop any excess capacity and non-profitable routes to minimize losses.
As of December 2017, LSC has five vessels deployed to key ports in Manila, Visayas, and Mindanao. It also has various equipment and facilities for handling customers’ cargoes, including land-based equipment such as forklifts, top lifts and trucks, as well as container yards and warehouses at its branches and agencies.
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