WG&A net profit down to P250.9M in 1st 9 months

Higher depreciation charges and operating expenses pulled down the net income of listed shipping firm William, Gothong & Aboitiz (WG&A) in the first nine months of the year to P250.89 million from P564.57 million the previous level.

Excluding the non-recurring items booked in 2002 and 2003, WG&A said, in a quarterly report filed with the Securities Exchange Commission, that its net income would have been P520 million.

Net interest expense for the first three quarters of the year grew two percent to P99 million from P97 million. This was attributed to the increase in the shipping firm’s obligation under capital lease due to the acquisition of 4,150 brand new containers, which were delivered last year.

Depreciation charges rose 21.78 percent to P364.74 from only P299.5 million in 2001 while overhead expenses went up to P663.84 million from last year’s P436.63 million.

Other expenses include a P28 million loss from sale of tied up vessels and a P21 million provision for write-down of tied-up vessels.

WG&A registered consolidated net revenues of P5.33 billion during the period under review compared with P5.14 billion in 2001.

Passage operations significantly improved, posting a revenue growth of 13 percent. Passengers carried for the first nine months increased by four percent, largely due to the company’s more effective marketing of higher value accomodations.

Freight revenue, however, was three percent lower than the same period last year due to the decrease in volume by about two percent. One chartered freighter was decommissioned in the middle of June this year.

For the third quarter alone, WG&A incurred a net loss of P4.11 million, 86.53 percent lower than the P30.52 million net loss registered the same period a year ago.

Last September, WG&A shareholders signed a share purchase agreement for the purchase of 61 percent shares of the Chiongbian Group and the Gothong Group in WG&A by Aboitiz Equity Ventures Inc.

The total transaction value is P3.5 billion, 50 percent of which will be paid in cash and the balance shall be covered by a five-year promissory note at the rate of 12 percent per annum.

The proposed acquisition by the Aboitiz family of the Gothong and Chiongbian’s combined interests in WG&A was a result of the compromise agreement they had entered into to settle their differences.

With the existing 31 percent ownership in WG&A, the Aboitiz Group will have over 92 percent of the company when the transaction is completed.

WG&A is the largest and most profitable shipping company in the Philippines. The company operates 23 vessels nationwide and is the largest provider of domestic ferry transportation in the Philippines on both the passenger and cargo business.

The firm was formed via a merger in 1996 of William Lines Inc., Carlos Gothong Lines Inc., and Aboitiz Shipping Corp.

With a deregulated industry, improved port facilities in Metro Manila for both freight and passage, a strong brand name, low leverage, strong cash flows and a leadership position in the industry, WG&A can provide Aboitiz with the earnings growth to coomplement its other investments in power, banking and food.