ICTSI 1H2020 net income down 12% to US$113.4M

“Our primary focus and central to our decision making since the start of the COVID-19 outbreak has been, and remains, the safety and wellbeing of our employees, customers, and our stakeholders.  We took immediate action to preserve cash and reduced our capital expenditure in what has been a period of significantly reduced economic and international trade activity, brought about by protracted lockdown periods for many countries around the world.  These prudent measures taken early on, our diversified portfolio and maintaining a very high level of service to our clients has helped cushion the impact from the pandemic and generated a resilient and better than expected performance. 

COVID-19 is now the major challenge for most businesses globally and we expect the second half of the year will continue to be challenging and marked with uncertainties.  However, ICTSI is well-positioned to navigate through these uncertain times, underpinned by our 32 terminals diversely located around the world, the resilience of our business model, agility and a strong capital structure.”

International Container Terminal Services, Inc. (ICTSI) today reported unaudited consolidated financial results for the first half of 2020 posting revenue from port operations of US$724.3 million, a decrease of four percent from the US$751.8 million reported for the same period last year; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$416.4 million, two percent lower than the US$424.4 million generated in the first half of 2019; and net income attributable to equity holders of US$113.4 million, 12 percent less than the US$128.5 million earned in the same period last year due to lower operating income, increase in interest on concession rights payable and COVID-19 related expenses; partially tapered by a reduction in net loss at its greenfield terminal in Melbourne, Australia and lower equity in net loss of joint ventures.  Equity in net loss of joint ventures decreased by 22 percent to US$9.7 million in the first half of 2020 from US$12.4 million for the same period in 2019 mainly due to the decrease in the Company’s share in net loss at Sociedad Puerto Industrial Aguadulce S.A. (SPIA), its joint venture container terminal project with PSA International Pte Ltd. (PSA) in Buenaventura, Colombia.  Diluted earnings per share was 10 percent lower at US$0.043 from US$0.048 in the first half of 2019. 

For the quarter ended June 30, 2020, revenue from port operations decreased five percent from US$368.0 million to US$348.5 million; EBITDA was one percent higher at US$204.2 million from US$201.9 million; and net income attributable to equity holders was at US$53.8 million, four percent less than the US$56.1 million in the same period in 2019.  Diluted earnings per share for the second quarter of 2020 was unchanged at US$0.020 compared to the same period in 2019.

ICTSI handled consolidated volume of 4,799,765 twenty-foot equivalent units (TEUs) for the first six months of 2020, five percent less than the 5,041,916 TEUs handled in the same period in 2019.  The decrease in volume was primarily due to the decline in trade activities which resulted from the impact of the COVID-19 pandemic on global trade and lockdown restrictions.  Excluding the contribution of the new terminal in Rio de Janeiro, Brazil, ICTSI Rio, consolidated organic volume would have decreased six percent in the first half of 2020.  For the quarter ended June 30, 2020, total consolidated throughput was 11 percent lower at 2,290,779 TEUs compared to 2,563,244 TEUs in 2019.

            Gross revenues from port operations for the first six months of 2020 decreased by four percent to US$724.3 million from the US$751.8 million reported in the same period in 2019 as trade activities declined due to the impact of the COVID-19 pandemic and lockdown restrictions; partially tapered by the contribution of ICTSI Rio; tariff adjustments and new services at certain terminals. Excluding contribution of ICTSI Rio, consolidated organic gross revenues would have decreased by six percent in the first half of 2020.  For the second quarter of 2020, gross revenues decreased five percent from US$368.0 million to US$348.5 million. 

Consolidated cash operating expenses in the first six months ended June 30, 2020 was four percent lower at US$222.8 million compared to US$232.0 million in the same period in 2019.  The decrease in cash operating expenses was mainly due to the continuous group-wide cost reduction and optimization measures; and favorable translation impact of Brazilian Reais (BRL)-based expenses in Suape, Brazil, Australian Dollar (AUD)-based expenses in Melbourne, Australia, Mexican Peso (MXN)-based expenses in Manzanillo, Mexico, and Pakistan Rupee (PKR)-based expenses in Karachi, Pakistan.  The decreased was tapered by the cost contribution of ICTSI Rio, the Company’s new terminal in Rio de Janeiro, Brazil.  Excluding the cost contribution of ICTSI Rio, consolidated cash operating expenses would have decreased by nine percent in 2020. 

Consolidated EBITDA decreased two percent to US$416.4 million for the first six months of 2020 from US$424.4 million in 2019 primarily due to lower operating revenues; tapered by lower cash operating expenses resulting from continuous cost reduction and optimization measures, and positive contribution of the new terminal, ICTSI Rio.  EBITDA margin, on the other hand, increased to 57 percent in the first half of 2020 from 56 percent the previous year. 

Consolidated financing charges and other expenses for the first half of 2020 increased 14 percent from US$59.6 million in 2019 to US$67.7 million in 2020 primarily due to COVID19-related expenses and the absence of capitalized borrowing cost related to the Phase 2 expansion project in Basra, Iraq in 2019. 

Capital expenditures, excluding capitalized borrowing costs, for the six months ended June 30, 2020 amounted to US$91.2 million.  The capital expenditures for the first half of 2020 were mainly for the ongoing expansions at Manila International Container Terminal (MICT) in Manila, Philippines; Contecon Manzanillo S.A. (CMSA) in Mexico; and ICTSI DR Congo (IDRC) in Matadi, Democratic Republic of Congo.  Amid the ongoing impact of the COVID-19 pandemic on global trade, the Group has reduced its capital expenditure plan for the year to approximately US$160 million, which will be utilized mainly to complete the ongoing expansion projects.