WG&A maps out long-term growth

It hasn’t been an easy year for WG&A. Like any transport company, it has been hit by the higher cost of fuel, on the one hand, and by the weaker peso and rising interest rates, on the other hand.

The country’s largest shipping company–with total assets of P7.83 billion–remains, however, better off than others in the industry. It currently controls 41 percent of the domestic cargo business and 54 percent of the passage segment. It also has a long-term map for growth put together by president and chief executive officer Enrique Aboitiz, Jr.

Using technology

A key element in WG&A’s business plan is higher levels of efficiencies achieved through technology.

"When our vessels sail with unused capacity–unused passenger bunks and empty container slots– we have lost that cash flow forever at compounded rates. We need to fill them and we need to fill them with higher paying cargoes," Aboitiz said.

To solve this problem, WG&A began upgrading its passage ticketing last year.

Today, the ticketing system runs on the web-enabled Nexus 2001. The improved ticketing system will be fully implemented in the company’s 375 outlets nationwide by the end of the year.

"With the new system, we can now capture new markets through the use of the internet, WAP and text messages," said Aboitiz.

The internet-ready freight online system (FOS) was piloted last December in the Manila, Cebu and Cagayan de Oro branches and is ready for nationwide application. FOS allows booking of cargo via e-mail and includes modules for land transportation and for documentation.

Closer coordination and better interaction among various operating and staff units has been achieved by consolidating the data center along with all South Harbor and key North Harbor offices at the company’s new headquarters in Times Plaza Bldg. at the heart of Manila.

Introducing EVA

Aboitiz has also pushed hard for the introduction of a new concept on performance measure called the economic value added . WG&A chief financial officer Susan Valdez describes EVA or net operating profit after tax less a capital charge as the true measure of economic profit.

"It gives a common measure of true worth, a common management and incentive system, a common language and a common objective of achieving operational efficiency, building growth and managing assets efficiently. All of these will result in achieving a common goal of creating shareholders’ value," she said.

This year, WG&A has set aside P600 million for capital expenditures. Part of the money will go into refurbishing the 1,126-passenger SuperFerry 14, the company’s most modern vessel in its fleet of 26 vessels calling on 22 ports.

There are also plans to buy another passenger-cargo vessel, depending on how the economy and the company fare this year. "We’re evaluating things right now. If everything goes well, the plan will push through this year," Aboitiz said.

So far, WG&A’s first quarter financials are upbeat.

Net income stood at P237 million, a 718percentjump from the P28 million registered a year ago. During the same period, revenues went up 28percentfrom P1.25 billion to P1.6 billion due to higher freight and passage rates. Freight revenues for the quarter improved 34percentto P892.8 million, brought about by the 23percentincrease in cargo rates and a 7percenthike in cargo volume.

Should the strong first quarter numbers hold for the rest of 2001, WG&A will easily close the year in the black, an improvement from its consolidated net loss after tax of P232 million last year and an indication of smoother sailing ahead. – L. Almonte