MANILA, Philippines - Port giant International Container Terminal Services Inc. (ICTSI) is consolidating its port assets in China as part of efforts to optimize the overall operations.
ICTSI treasury director and head of investor relations Arthur Tabuena said in a disclosure to the Philippine Stock Exchange that the Ministry of Commerce - Shandong Province of China gave ICTSI (Hong Kong) Ltd. to consolidate overall port operations within the Zhifu Bay Port area in Yantai, China.
To achieve this, ICTSI would acquire 51 percent of DP World Yantai Co. Ltd. and would be renamed Yantai International Container Terminals Ltd. (YICT).
DP World China (Yantai) Ltd. would retain a 12.5-percent equity interest in YICT while the balance of 36.5 percent would be owned by Yantai Port Holdings Co. Ltd. (YPH).
YICT would become the only foreign container terminal within the Zhifu Bay Port area, with ICTSI as the majority shareholder.
Likewise, ICTSI would sell its entire 60-percent equity interest in Yantai Rising Dragon International Container Terminals Ltd. (YRDICTL) to Yantai Port Holdings.
YRDICTL would become a wholly-owned subsidiary of Yantai Port Holdings and its operations would focus on handling local container cargo only.
Tabuena said the consideration for the acquisition of 51 percent of YICT by ICTSI would be paid in four installments and would be partially funded from the sale of ICTSI’s 60-percent interest in YRDICTL to Yantai Port Holdings.
He explained that the major container operators within Yantai Port agreed to consolidate container operations in order to achieve synergy in the allocation of resources, improve economies of scale by separating the local and foreign container handling operations, and upgrade the professional level of the container operations of the Yantai Port as a whole.
Earnings of ICTSI jumped 29 percent to $52.4 million in the first quarter of the year from $40.7 million in the same period last year as port revenues surged 19 percent to $248.9 million from $209.3 million.
Global consolidated volume handled by ICTSI jumped 17 percent to 1.757 million twenty-foot equivalent units (TEUs) from 1.496 million TEUs. ICTSI has seven key terminal operations in Manila, Brazil, Poland, Ecuador, Madagascar, China and Pakistan.
ICTSI has earmarked $310 million for its capital expenditures this year for the completion of phase one development in the company’s new container terminals in Mexico and Argentina and to start the development of the terminals in Honduras and Congo.