Startup costs pull down ICTSI profit in H1 by 13%

International Container Terminal Services Inc. (ICTSI), the global cargo ports operator of Filipino billionaire Enrique Razon Jr., said earnings in the first half of 2016 were dragged down by startup costs from a project in Argentina.

ICTSI said net income in the first half of 2016 hit $87.3 million, down 13 percent, while port revenues slipped 0.2 percent to $550.8 million, compared to the same period in 2015.

Apart from expenses related to Tecplata S.A., its new terminal in Buenos Aires, Argentina, the company said earnings were hurt by an unfavorable volume mix, lower noncontainerized and storage revenues.

ICTSI said removing expenses related to Tecplata and other “new projects,” profit during the first half period would have increased 6 percent.

The company managed to post higher port revenues in the second quarter of the year.

Revenue here rose 11 percent to $284.3 million while net income was down 3 percent to $45.1 million.

ICTSI, which is listed on the Philippine Stock Exchange, said it handled a consolidated volume of 4.26 million twenty-foot equivalent units (TEUs) in the first six months of 2016,  up 10 percent.

It said the increase was mainly due to the “continuing ramp-up” of operations in Iraq; new shipping line customers and services in its terminals in Guayaquil, Ecuador, Manzanillo, Mexico, Karachi, Pakistan and Jakarta, Indonesia.

It also cited the improvement in trade activities at most of the terminals in Asia.

Meanwhile, ICTSI said total cash operating expenses in the first half of 2016 were 10 percent lower at $204.2 million.

During the January-June period, ICTSI said capital spending hit $157.8 million, about 38 percent of the $420-million capital expenditure budget for the full year 2016.

Spending this year was mainly allocated for the completion of the initial stage of the company’s new container terminals in Australia, Democratic Republic of Congo and Iraq, and the continuing development of the company’s projects in Honduras and Mexico.

In addition, ICTSI invested $32.3 million in the development of SPIA, its joint venture container terminal development project with PSA International Pte Ltd. (PSA ) in Buenaventura, Colombia.

Its budget for 2016 to complete the initial phase of the project is approximately $60 million.