ICTSI reports solid third quarter results

International Container Terminal Services, Inc. (ICTSI) has reported solid consolidated unaudited financial results for the quarter ending 30 September 2008, posting third quarter revenue from port operations of PHP5.68 billion, an increase of 35 percent over PHP4.21 billion reported last year; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of PHP2.55 billion, up 48 percent from the PHP1.72 billion earned in the third quarter of 2007; and net income attributable to equity holders of PHP734 million, an increase of 2 percent over the PHP720 million earned in the same period last year. 

Third quarter results include a loss on hedging activities of PHP190 million (PHP124 million after tax), and an increase in the effective tax rate to 42.8 percent, from 29.1 percent in the prior year period. 

Both the 2007 and 2008 results reflect the adoption on 1 January (and restatement of 2007) of IFRIC Interpretation 12 – Accounting for Service Concession Agreements, and include an associated net unrealized foreign exchange gain of PHP64 million in the third quarter of 2007 and a net unrealized foreign exchange loss of PHP43 million in the same quarter of 2008.  Excluding the impact of IFRIC 12, third quarter net income attributable to equity holders would have been PHP643 million in 2007 and PHP751 million in 2008, an increase of 17 percent. 

For the nine months ending 30 September 2008, revenue from port operations grew 43 percent, from PHP10.61 billion to PHP15.22 billion.  EBITDA increased 48 percent, from PHP4.51 billion to PHP6.70 billion.  Net income attributable to equity holders grew 12 percent, from PHP2.03 billion to PHP2.26 billion.  The first nine months net income results include a net unrealized foreign exchange gain of PHP373 million in 2007, and a net unrealized foreign exchange loss of PHP208 million in 2008 resulting from the adoption of IFRIC 12.  Excluding the impact of IFRIC 12, the first nine months net income attributable to equity holders would have been PHP1.70 billion in 2007 and PHP2.41 billion in 2008, an increase of 42 percent. 

Enrique K. Razon Jr. ICTSI chairman and president, commented, “Despite a worsening global economic climate, ICTSI has delivered solid results for the quarter.  We remain cautious concerning the outlook for the global economy and world trade, and are taking steps to position ourselves accordingly.” 

ICTSI handled consolidated volume of 1,021,499 twenty foot equivalent units (TEUs) in the third quarter of 2008, 26 percent higher compared to the 811,049 TEUs handled in the same period in 2007.  For the nine months ended 30 September 2008, total TEUs handled was 2,776,972 compared to 2,095,798 TEUs in 2007, a 33 percent increase over the same period last year. 

Domestic operations accounted for 530,463 TEUs or 52 percent of consolidated volume for the quarter.  Volume from domestic operations grew by 28 percent in the third quarter of 2008 mainly due to a 13 percent volume increase at the Manila International Container Terminal (MlCT), the additional volume from the company’s new port operations in Misamis Oriental, southern Philippines, and the consolidation of the volume of South Cotabato Integrated Port Services Inc. (SCIPSI), its port in General Santos City, South Cotabato, Philippines.  ICTSI increased its shareholdings in SCIPSI from 35.70 percent to 50.08 percent last 9 July 2008. 

Foreign container volume, on the other hand, grew 23 percent over the same period last year, driven principally by the addition of the company’s Ecuador, Syria and Georgia port operations, and exceptionally strong growth at the company’s operations in Brazil, Madagascar, and China.  Container volumes from foreign operations accounted for 48 percent of total consolidated volume for the quarter.

Third quarter gross revenues from port operations increased by 35 percent to PHP5.68 billion, from the PHP4.21 billion reported in the third quarter of 2007.  Revenues from the existing business units improved by 25 percent, accounting for 64 percent of total consolidated revenue growth during the quarter.  Combined revenues from new port operations in Ecuador, Georgia, Syria, and Misamis Oriental, Philippines, on the other hand, accounted for 36 percent of total consolidated revenue growth.  Revenue contribution from the international operations grew 38 percent, from PHP2.28 billion in the third quarter of 2007 to PHP3.15 billion in the same period in 2008.  Foreign operations accounted for 56 percent of this quarter’s consolidated gross revenue, as compared with 54 percent in the third quarter of 2007 and 48 percent for the full year 2007.  Revenue contribution from domestic operations, on the other hand, grew 31 percent, from PHP1.92 billion in the third quarter of 2007 to PHP2.53 billion this quarter. 

Total consolidated cash operating expenses for the quarter increased 23 percent to PHP2.38 billion, from PHP1.94 billion in the third quarter of 2007.  This increase is principally due to the additional expenses from new port operations in Georgia and Misamis Oriental, Philippines and the pre-operating expenses from the new port in Colombia.  Increases in fuel, manpower, equipment and utilities consumptions related to the increase in TEU volumes at the company’s existing operations in Manila, Brazil, Madagascar, Indonesia, China, and Davao, Philippines were also a contributing factor.  For the nine months ended 30 September 2008, total consolidated cash operating expenses totaled PHP6.50 billion, 40 percent higher than the PHP4.66 billion in the same period last year. 

Consolidated financing costs and bank charges were flat during the third quarter and nine-month periods due to lower borrowing cost despite the higher debt levels.  It was one percent higher in the third quarter 2008 at PHP260 million compared to PHP257 million in the same quarter last year.  For the nine months ended 30 September, it was two percent lower in 2008 at PHP534 million compared to PHP545 million in 2007.  However, hedging losses totaled PHP190 million (PHP=124 million after tax) in the third quarter due to highly volatile market conditions.  Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter 2008 improved 48 percent to P,=2.55 billion, from P,=1.72 billion in the same period in 2007.  Restated consolidated EBITDA margin for the third quarter 2008 was higher at 45 percent compared to the 41 percent last year.  For the nine months ended 30 September 2008, EBITDA totaled P=6.70 billion or 48 percent higher than the P=4.51 billion reported for the same nine-month period in 2007, while restated consolidated EBITDA margin was also higher at 44 percent compared to 43 percent it registered in the same period in 2007.  Excluding the impact of IFRIC 12, EBITDA for the third quarter was P,=2.17 billion versus P,=1.44 billion in the prior year period, an increase of 51 percent, and an improvement in EBITDA margin to 38 percent from 34 percent. 

In the first nine months of 2008, ICTSI invested P=6.06 billion mainly to expand the handling capacity and improve the operating efficiency of the company’s operations in Manila, Brazil and Madagascar, and pay for the acquisition and rehabilitation of the new terminals in Ecuador, Syria, Georgia, and Colombia

Source: Portnews