ICTSI 2022 Net Income up 44% to US$618.46M

6 March 2023

Manila International Container Terminal at the Port of Manila

Throughput grew 9% to 12.22 million TEUs
Revenues increased 20% to US$2.24 billion
EBITDA 24% higher to US$1.41 billion
Diluted EPS surged 58% to US$0.29

Enrique K. Razon, Jr., ICTSI Chairman and President said: “ICTSI delivered a strong performance in 2022 with revenues up 20 percent to US$2.24 billion and EBITDA of US$1.41 billion, an increase of 24 percent against the previous year driven by tight operational controls and volume growth of nine percent to 12,216,190 twenty-foot equivalent units (TEU).

"In a year marked by geopolitical unrest and inflationary pressures, we took clear and robust actions to focus on our cost initiatives and implemented a selective and disciplined capex programme which has pleasingly created value for our stakeholders. While the weaker economic backdrop continues, our business fundamentals remain constructive and we remain strongly positioned to deliver sustainable growth. I would like to thank colleagues across the Group who have worked hard to deliver an excellent year of results during a choppy year and the strength of our financial and operational results is testament to their hard work and commitment.”

International Container Terminal Services, Inc. (ICTSI) today reported audited consolidated financial results for 2022 posting revenue from port operations of US$2.24 billion, an increase of 20 percent from the US$1.87 billion reported last year; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$1.41 billion, 24 percent higher than the US$1.14 billion generated in 2021; and net income attributable to equity holders of US$618.46 million, 44 percent more than the US$428.57 million earned last year primarily due to higher operating income; partially tapered by increase in depreciation and amortization charges, interests on loans, lease liabilities and concession rights payable, provision for income taxes, and nonrecurring impairment charges. Diluted earnings per share increased 58 percent to US$0.29 from US$0.18 in 2021. Excluding non-recurring charges, recurring net income attributable to equity holders of the parent in 2022 was 43 percent higher at US$634.48 million compared to the US$442.83 million earned the previous year.

In 2022, the Company recognized non-recurring impairment charges on other non-financial assets amounting US$16.01 million. In 2021, the non-recurring impairment charges on other non-financial assets and charges associated with the prepayment of loan facilities at Victoria International Container Terminal (VICT) amounted to US$14.26 million.

ICTSI handled consolidated volume of 12,216,190 twenty-foot equivalent units (TEUs) in 2022, nine percent more than the 11,163,473 TEUs handled in the same period in 2021. The increase in volume was primarily due to consolidation of Manila North Harbour Port, Inc. (MNHPI) in Manila, Philippines starting September 2022; volume growth and improvement in trade activities as economies continue to recover from the impact of the COVID-19 pandemic and lockdown restrictions; and new shipping lines and services at certain terminals. Excluding the volume contribution of MNHPI, International Container Terminal Services Nigeria Ltd. (ICTSNL) - the company’s new terminal in Port of Onne, Nigeria) and Davao Integrated Port and Stevedoring Services Corporation (DIPSSCOR) in Davao, Philippines which ceased operations on June 30, 2022, consolidated volume would have increased by five percent.

Gross revenues from port operations for the year ended December 31, 2022 was 20 percent higher at US$2.24 billion compared to the US$1.87 billion reported in the same period in 2021 mainly due to volume growth and market recovery from the impact of the pandemic, favorable container mix, tariff adjustments at certain terminals, new contracts with shipping lines and services, higher revenues from ancillary services, and the contribution of MNHPI and the new terminals Manila Harbor Center Port Services, Inc. (MHCPSI) in the Philippines, ICTSNL in Nigeria and IRB Logistica in Brazil. This was partially tapered by decline in trade activities at PICT in Karachi, Pakistan, and unfavorable translation impact mainly due to the depreciation of Philippine peso (PHP)- and Australian dollar (AUD)- based revenues at Philippine terminals and VICT in Melbourne, Australia, respectively, and Euro (EUR)-based revenues at Madagascar International Container Terminal Services Ltd. (MICTSL) and Adriatic Gate Container Terminal (AGCT), in Madagascar and Croatia, respectively. Excluding the consolidated revenues of MNHPI, the new terminals and businesses, and the cessation of operations at DIPSSCOR and Hijo International Port Services Inc. (HIPSI), in Davao, Philippines, consolidated gross revenues would have increased by 17 percent.

Consolidated cash operating expenses in 2022 was 17 percent higher at US$612.12 million compared to US$523.33 million in 2021. The increase in cash operating expenses was primarily due to costs contribution of MNHPI and new terminals; increase in equipment and facilities-related expenses, mainly fuel and power; government-mandated and contracted salary rate adjustments, including benefits; contracted services in relation to volume; and unfavorable foreign exchange effect of Brazilian Reais- (BRL) based expenses at ICTSI Rio and Tecon Suape S.A. (TSSA) in Brazil. This was partially tapered by continuous cost optimization measures implemented and favorable foreign exchange effect mainly of Philippine Peso (PHP)-, Pakistani Rupee (PKR)-, Australian Dollar (AUD)- and Polish Zloty (PLN)- based expenses at the terminals in the Philippines, Pakistan, Australia and Poland, respectively. Excluding the cost contribution of MNHPI, and the new and discontinued terminals, consolidated cash operating expenses would have increased by 12 percent.'

Consolidated EBITDA increased 24 percent to US$1.41 billion in 2022 from US$1.14 billion in 2021 mainly due to higher revenues, partially tapered by the increase in cash operating expenses. Consequently, EBITDA margin increased to 63 percent in 2022 from 61 percent the previous year.

Consolidated financing charges and other expenses increased by 16 percent to US$198.04 million from US$170.54 million in 2021 mainly due to higher interest and financing charges on borrowings primarily due to the issuance of US$300 million senior notes in November 2021 which funded the redemption of US$183.76 million worth of 5.875 percent and US$85.22 million of 4.875 percent senior guaranteed perpetual capital securities with call dates in 2022 and 2024, respectively; the consolidation of the outstanding loan of the Company’s new terminal in the Philippines; higher COVID-19-related expenses, and nonrecurring charges on impairment of non-current assets.

Capital expenditures, excluding capitalized borrowing costs, in 2022 amounted to US$386.35 million. These were mainly for ongoing expansions at VICT in Melbourne, Australia, Manila International Container Terminal (MICT) in the Philippines, ICTSI DR Congo S.A. (IDRC) in Matadi, Democratic Republic of Congo and Contecon Manzanillo S.A. de C.V. (CMSA) in Manzanillo, Mexico; the acquisition of land at the Port of Manila in the Philippines; and concession-extension related expenditures at MICTSL in Madagascar. 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 Australia, Mexico, 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 newly acquired terminal in East Java in Indonesia; equipment acquisitions and upgrades; and for maintenance requirements.

ICTSI is a leading global developer, manager and operator of container terminals in the 50,000 to 3.5 million TEU/year range. ICTSI operates 33 terminals in 20 countries across six continents and continues to pursue container terminal opportunities around the world.