International Container Terminal Services, Inc. (ICTSI) reported audited consolidated financial results for 2019 posting revenue from port operations of US$1.5 billion, an increase of 7% over the US$1.4 billion reported in 2018.
Earnings before interest, taxes, depreciation and amortization (EBITDA) of US$830.1 million was 10% higher than the US$755.4 million generated in 2018 and net income attributable to equity holders of to US$100.4 million was down 52% compared to the US$207.5 million earned last year.
In 2019, the Company recognised non-recurring charges totalling US$158.7 million composed principally of impairment charges on the concession rights assets of Tecplata S.A., the Company's terminal in Buenos Aires, Argentina, amounting to US$156.0 million due to lower projected cash flows on its updated business plan as a result of the prevailing and challenging economic conditions in Argentina.
In addition, the company also booked a US$2.7 million charge on an acceleration of debt issue cost brought about by the partial prepayment of the company’s euro-denominated term loan. In 2018, the company recognised a non-recurring gain of US$2.8 million due to the termination of the interest rate swap brought about by the prepayment of the project finance loan in Contecon Manzanillo S.A., the Company’s container terminal in Manzanillo, Mexico and a US$5.8 million non-recurring impairment charge on the goodwill at its terminal in Davao, Philippines.
"Recurring net income was US$259.1 million up 23% compared to the previous year but owing to the one-off non-cash impairment of the concession right assets of Tecplata S.A which we re-valued in light of prolonged difficult economic conditions in Argentina, net income fell," Enrique K. Razon, Jr., chairman of ICTSI commented.
ICTSI handled consolidated volumes of 10,178,018TEU in 2019, 5% more than the 9,736,621TEU handled in 2018. The increase in volume was mainly due to the continuing ramp-up at ICTSI’s new terminals in Lae and Motukea in Papua New Guinea and the contribution of the new terminal in Rio de Janeiro in Brazil.
Improvements in trade activities were also seen in Subic, Philippines, Matadi, Democratic Republic of Congo and Basra, Iraq, new contracts with shipping lines and services at Victoria International Container Terminal in Melbourne, Australia, Baltic Container Terminal in Gdynia Poland, Adriatic Gate Container Terminal in Rijeka, Croatia, Batumi International Container Terminal in Batumi, Georgia and Contecon Manzanillo S.A. in Manzanillo, Mexico.
Gross revenues from port operations in 2019 increased 7% to US$1.5 billion compared to US$1.4 billion reported in 2018. The increase in revenues was mainly due to volume growth; tariff adjustments at certain terminals; new contracts with shipping lines and services; higher revenues from ancillary services; and the contribution from the company’s new terminals in Lae and Motukea in Papua New Guinea, and Rio De Janeiro in Brazil.
“The outbreak of COVID-19 has had an impact on volumes particularly in Asia and we are closely reviewing developments across the regions in which we operate. Whilst we cannot be certain how long this situation will last, we are seeking to mitigate this impact through rigourous cost control and increasing market share,” ICTSI's chairman added.
Consolidated EBITDA for 2019 increased 10% to US$830.1 million from US$755.4 million in 2018 mainly due to strong revenue growth and minimal cash operating expense increase. Consequently, EBITDA margins increased to 56% in 2019 from 55% in 2018.
Consolidated financing charges and other expenses for 2019 increased by 121% from US$128.6 million in 2018 to US$284.0 million in 2019 primarily due to the impairment charges at its subsidiary in Buenos Aires, Argentina.