Weak global trade prompts ICTSI to cut budget to $350M

International Container Terminal Services Inc. (ICTSI) cut its capital spending target for this year by a third, citing the weaker global trade outlook.

ICTSI, led by billionaire Enrique Razon Jr., said in a regulatory filing its full-year spending for 2015 will only be $350 million instead of the $530 million it projected earlier.

As of the first nine months of 2015, ICTSI has already spent $254.6 million.

“The under spending on capital expenditures was mainly from longer payment schedules on civil works and equipment contracts in most of the company’s greenfield projects, foreign exchange related savings brought about by the stronger US dollar, and a number of postponed capital expenditures on volume-related expansions given the weak global trade outlook,” ICTSI said.

The allocated budget was meant for the completion of its new container terminals in Mexico, Honduras and Iraq, the capacity expansion of its terminal in Manila, and for the development of new terminals in Democratic Republic of Congo and Australia.

In addition, ICTSI invested $79.1 million for the development of Sociedad Puerto Industrial Aguadulce S.A. (SPIA), its joint venture container terminal development project with PSA International Pte Ltd. (PSA) in Buenaventura, Colombia. For this year, ICTSI’s share to complete phase one of the project is approximately $140 million.

ICTSI cut its budget even as earnings rose in the first three quarters of the year. It said net income during the period rose 0.3 percent to $136.2 million as revenues from port operations rose two percent to $792 million.

Removing non-recurring gains like the sale of a subsidiary in Cebu and the termination of a management contract in India, the company said recurring net income would have risen 9 percent in the nine-month period.