Aboitiz transport unit eyes cautious expansion through more acquisitions

MANILA, Philippines - Aboitiz Transport Service Corp. (ATSC), the country’s largest shipping firm, is cautiously looking at further expansion through the acquisition of new vessels and another supply chain company despite the current global economic slowdown.

Enrique Aboitiz, president of ATSC, said the firm is in a good position to pursue expansion with continued profitable operations and a strong balance sheet made possible by well-timed sale of a string of several vessels in the past several years at advantageous prices.

“We had a good first quarter as you saw. And hopefully it will improve,” Aboitiz told transportation reporters at the sidelines of ATSC’s annual stockholders’ meeting in Makati City last Thursday.

“Ultimately, we were able to sell eight to nine ships at very, very high prices. Our balance sheet is very, very strong. We have now the capacity to expand (but) with a very, very high level of financial prudence,” Aboitiz added.

The company reported that for the first quarter of 2009, it posted a P132-million profit, a reversal from the P36-million net loss in the same period last year.

The company said, however, that consolidated revenues however fell four percent to P2.9 billion from P3 billion last year.

Freight, which constitutes the bulk of revenues, dropped 27 percent brought about by the decline in its international chartering business.

Aboitiz said that they are programming a capital expenditure of P1.4 billion this year, which could be hiked to up to P2.4 billion if the need arises.

“Well, we have to be careful because the national situation is still not clear. We will observe over the next few months what happens with local demand, the general world financial situation. You know, there’s a lot of opinions on where things are going to go,” Aboitiz expained.

“There’s nothing very definite for now. We’re just saying that we’re well positioned that when things begin to go up,” Aboitiz said.

It will be recalled that a wholly-owned ATSC subsidiary, Aboitiz One (One), acquired supply chain management firm ScanAsia for $8.4 million last year.

Scanasia is engaged in the business of sales, marketing, warehousing and transportation of temperature-controlled and ambient food products to its customers in the Philippines.

Aboitiz said that while they were still in the process of “digesting” ScanAsia, they could also buy another supply chain company to expand.

Aboitiz said that they could also buy a cargo vessel.

“We are now looking and seeing what is available and we have to assess when we make the move. We’re not sure that the market has stabilized or not,” Aboitiz said.

ATSC received last year a buyout offer from KGLI-NM, a joint venture between shipping firm Negros Holdings and Dutch company,KGL Investment BV last year but the consortium backed out from the deal earlier this year.