International Container Terminal Services Inc. (ICTSI), a global seaport operator led by billionaire Enrique Razon Jr., is tempering its outlook through 2017 due to uncertainties in the global economic landscape.
ICTSI chair and president Enrique Razon Jr. told shareholders during the firm’s annual stockholders’ meeting Thursday that weak trading growth, partly due to China’s slowdown, had affected ICTSI’s port operations overseas, including its Suape Container Terminal in Brazil.
Elsewhere in the world, the sharp drop in oil prices is resulting in a slowdown in countries and regions dependent on the resource.
“The problem with the world now is demand. There is no growth in trade,” Razon said. “I expect that to continue up to next year. It will probably get worse before it gets better.”
ICTSI has 30 terminal concessions and port development projects in 20 countries. Through the years, it has focused on high-growth, emerging and, sometimes, difficult areas.
The company’s Brazil port used to be among its biggest revenue contributors, alongside Manila, Poland, Madagascar, China, Ecuador and Paksitan. But today, Razon described Brazil’s situation as an “economic disaster.”
“It [Brazil] is down by almost half from what it was two years go. We don’t see any relief in sight at the moment,” he said.
He said ICTSI would control costs and might “reduce the head count” in certain ports.
Nevertheless, Razon said ICTSI remained open to bidding for port deals overseas, but added that it would assume a less aggressive stance.
ICTSI announced earlier that capital spending for 2016 would hit $420 million, mainly to expand its presence overseas. It cut spending last year to $353.5 million, from the $530 million it had allotted, given slowing trade growth worldwide.
The company said this year’s budget was allocated for new container terminals in the Democratic Republic of Congo and Iraq, and the continuing development of its project in Australia. Of this amount, it said $60 million was allocated for its share in a container terminal venture in Buenaventura, Colombia.
ICTSI said profit in 2015 slipped 68 percent to $58.5 million, citing one-time adjustments and non-recurring charges. Without these extraordinary items, ICTSI said net income would have increased by 1 percent to $174.7 million last year.
Revenue from port operations last year slipped 1 percent to $1.05 billion.
In 2015, the company recognized non-recurring charges totaling $116.2 million mainly on impairment charges on the concession rights assets of Tecplata S.A. (Tecplata), its terminal in Buenos Aires, Argentina, amounting to $88 million, and the goodwill of subsidiaries PT ICTSI Jasa Prima Tbk and PT OJA in Jakarta, Indonesia aggregating $26.6 million.