ICTSI 1H2023 Net Income Up 7% to US$313.80M
Tecon Suape, International Container Terminal Services, Inc.'s operation in Pernambuco, Brazil
- Throughput grew 9% to 6.28 million TEUs; Organic volume grew by 1%
- Revenues increased 10% to US$1.16 billion
- EBITDA 8% higher to US$728.88 million
- Diluted EPS increased 9% to US$0.147
Enrique K. Razon, ICTSI Chairman and President said: “ICTSI’s diversified portfolio, operational discipline and the determined focus from our fantastic team around the world has enabled us to deliver another strong financial performance.”
“We have a robust balance sheet and a highly cash generative business which looking ahead, will enable us to continue our strong track record of investing in our terminals to support future growth for the benefit of all our stakeholders. Our estimated capital expenditure is US$400 million for the year which will be used to expand and improve productivity and efficiency at terminals including Australia, Mexico, Philippines, Democratic Republic of Congo and Nigeria. These investments are examples of our ongoing commitment to make our ports more efficient, accessible and globally competitive.”
“The macroeconomic and geopolitical climate continues to be uncertain but these results give us continued confidence in our financial and operational resilience. The opportunities for future growth are considerable and we will work closely with our stakeholders to achieve positive change for the communities in which we operate and deliver long-term sustainable growth.”
International Container Terminal Services, Inc. (ICTSI) today reported unaudited consolidated financial results for the first half of 2023 posting revenue from port operations of US$1.16 billion, an increase of 10 percent from the US$1.06 billion reported for the first six months of 2022; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$728.88 million, eight percent higher than the US$672.14 million generated the same period last year; and net income attributable to equity holders of US$313.80 million, seven percent more than the US$294.48 million earned in the first half of 2022 primarily due to higher operating income and interest income, and lower COVID-19-related expenses; partially tapered by nonrecurring impairment of goodwill attributed to Pakistan International Container Terminal (PICT) and increases in depreciation and amortization, interest on loans, lease liabilities and concession rights payable. Excluding the impairment of goodwill attributed to PICT, net income attributable to equity holders would have grown 10 percent to US$324.41 million. Diluted earnings per share increased nine percent to US$0.147 in 2023 from US$0.135 in 2022.
For the quarter ended June 30, 2023, revenue from port operations increased 11 percent from US$534.64 million to US$592.73 million; EBITDA was 12 percent higher at US$374.68 million from US$334.29 million; and net income attributable to equity holders was at US$159.19 million, five percent more than the US$152.20 million in the same period in 2022. Excluding the impairment of goodwill attributed to PICT, net income attributable to equity holders would have grown 12 percent to US$169.80 million. Diluted earnings per share for the second quarter of 2022 and 2023 was at US$0.070 and US$0.075, respectively.
ICTSI handled consolidated volume of 6,275,837 twenty-foot equivalent units (TEUs) in the six months ended June 30, 2023, nine percent more compared to the 5,752,582 TEUs handled in the same period in 2022. The increase in consolidated volume was mainly due to the contribution of MNHPI in Manila, Philippines that was consolidated starting September 2022, improvement in trade activities, and new services at certain terminals; 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, DIPSSCOR and MTS, consolidated volume would have increased by one percent for the six months ended June 30, 2023. For the quarter ended June 30, 2023, total consolidated throughput was nine percent higher at 3,173,732 TEUs compared to 2,919,581 TEUs in 2022.
Gross revenues from port operations for the first half of 2023 increased by 10 percent to US$1,164.97 million compared to the US$1,062.91 million reported in the same period in 2022 mainly due to the contribution of MNHPI and new businesses at IRB Logistica in Brazil; volume growth, tariff adjustments and higher revenues from ancillary services and general cargo business at certain terminals; and favorable translation impact mainly of the appreciation of Mexican Peso (MXN)- and Iraqi Dinar (IQD)- based revenues at Contecon Manzanillo S.A. (CMSA) and Basra Gateway Terminal (BGT), in Mexico and Iraq respectively; partially tapered by slowdown in trade activities at Victoria International Container Terminal (VICT) and PICT, including the impact of the expiration of the concession at PICT; and unfavorable translation impact mainly of the depreciation of Philippine Peso (PHP)-, Australian Dollar (AUD)-, Pakistani Rupee (PKR)-, Nigerian Naira (NGN)- and Chinese Renminbi (RMB)- based revenues at Philippine terminals, VICT, PICT, International Container Terminal Services Nigeria Ltd. (ICTSNL) and Yantai International Container Terminal (YICT) in Australia, Pakistan, Nigeria and China, respectively. Excluding the contribution of MNHPI, and impact of new and discontinued businesses, consolidated gross revenues would have increased by six percent for the six months ended June 30, 2023. For the second quarter of 2023, gross revenues increased 11 percent from US$534.64 million to US$592.73 million.
Consolidated cash operating expenses in the first six months of 2023 was 15 percent higher at US$325.85 million compared to US$283.86 million in 2022. The increase in cash operating expenses was mainly due to the costs contribution of MNHPI and of new businesses at IRB Logistica; government-mandated and contracted salary rate adjustments, increases in business development expenses and equipment repairs; unfavorable foreign exchange effect of MXN-based expenses at CMSA; partially tapered by decrease in power costs; continuous cost optimization measures implemented; favorable foreign exchange effect mainly of PKR-, PHP- and AUD- based expenses at PICT, Philippine terminals and VICT, respectively; and the expiration of concession contract at PICT and termination of cargo handling operations at DIPSSCOR and MTS. Excluding the contribution of MNHPI, and costs associated with new and discontinued businesses, consolidated cash operating expenses would have increased by 12 percent.
Consolidated EBITDA for the first six months of 2023 increased eight percent to US$728.88 million from US$672.14 million in 2022 mainly due to higher revenues partially tapered by the increase in cash operating expenses. EBITDA margin, on the other hand, remained flat at 63 percent in the first half of 2023.
Consolidated financing charges and other expenses increased three percent to US$91.70 million for the first six months ended June 30, 2023 from US$88.93 million in 2022 mainly due to higher interest and financing charges on short-term loan availments in the second and third quarters of 2022 and in the first quarter of 2023, as well as long term-loan availed in first quarter of 2023; and a nonrecurring impairment of goodwill attributed to PICT. This was partially offset by lower Covid 19-related expenses.
Capital expenditures, excluding capitalized borrowing costs, amounted to US$152.23 million for the first six months of 2023. These were mainly for ongoing expansions and acquisition of equipment at CMSA in Manzanillo, Mexico, VICT in Melbourne, Australia, Manila International Container Terminal (MICT) in the Philippines and ICTSI DR Congo S.A. (IDRC) in Matadi, Democratic Republic of Congo. The Group’s estimated capital expenditure for 2023 is approximately US$400 million. The estimated capital expenditure will be utilized mainly for the 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 50.0 thousand to 3.5 million TEU/year range. ICTSI operates in six continents and continues to pursue container terminal opportunities around the world.