ICTSI bags prime Mexico port contract

MANILA, Philippines - International Container Terminal Services Inc. (ICTSI) has bagged the 34-year concession for the development and operation of the second specialized container terminal of the Port of Manzanillo, located on the Pacific coast of Mexico and the busiest port in the country.

ICTSI was declared by the Administracion Portuaria Integral de Manzanilla. S.A. (Integrated Port Administration) the winner of the concession. The agreement will be signed on Jan. 15, 2010 and takeover is scheduled on July 1, 2010.

The port development project covers an area of 77 hectares with 1,080 meters of sea front. The development of the container terminal will be done in three phases, with the first phase involving 42 hectares with 720 meters of quay length and expected to be completed within three years from signing of the concession agreement.

ICTSI earlier reported a 29 percent drop in its net income for the first nine months of 2009 to $37.2 million from $52.4 million in the same period last year.

Excluding the effects of foreign exchange translation, net income should have declined 21 percent to $41.2 million, company officials said.

ICTSI officials explained that the lower net income was mainly due to lower volume brought about by the decline in global trade, higher interest expense due to higher debt level, and the depreciation of currencies in the countries where ICTSI’s ports are located (Philippine peso, Brazilian reais, Malagasy ariary, euro) relative to the US dollar.

For the nine-month period, revenue from port operations decreased 15 percent from $352.3 million to $299.3 million. Earnings before interests, taxes, depreciation and amortization (EBITDA) also declined 17 percent from $154.9 million to $129.1 million.

ICTSI chairman and president Enrique Razon Jr. noted that the global economic conditions continue to be more challenging than in recent years. “Third quarter throughput volumes were stronger than the first two quarters, and the benefits of our cost containment efforts also contributed to ICTSI’s improving financial results,” he said.

ICTSI’s throughput in the third quarter was eight percent lower at 943,805 twenty foot equivalent units (TEUs) compared to the 1.02 million TEUs in the same period in 2008. For the first nine months, total TEUs handled were 2.53 million compared to 2.77 million TEUs in 2008, a decline of nine percent.

Volume from the company’s container terminal operations in Asia was relatively flat in the third quarter of 2009 with a slight decline of 0.4 percent from 599,729 TEUs to 597,076 TEUs. For the first nine months, total TEUs handled by the group’s container terminal operations in Asia was 1.6 million TEUs, lower than the 1.62 million TEUs in same period in 2008.

ICTSI’s container terminal operations in Asia, comprised of the terminals in the Philippines, Indonesia, Japan and China, accounted for 63 percent of consolidated volumes in the third quarter.

Revenue contribution from container terminal operations in Asia decreased four percent in the third quarter from $58.7 million in 2008 to $56.3 million in 2009.

For the first nine months of the year, revenue contribution from the company’s container terminal operations in Asia contracted nine percent to $151.6 million compared to $166.6 million in the same period in 2008.

ICTSI has invested $77 million this year principally to improve operating efficiency and acquire container handling equipment at its port operations in Ecuador (CGSA) as well as fund the construction of the sixth berth in Manila (MICT).

For the full year 2009, the total estimated consolidated capital expenditures is $146.9 million (P7.2 billion), mainly for civil works, systems improvement and purchase of major cargo handling equipment at its port operations in Manila, Brazil, and Ecuador.

The company said they expect to meet funding requirements for these expenditures from existing cash balance and internally generated funds.