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ICTSI expects to spend only half of its 2015 budget as global growth slows down

ICTSI expects to spend only half of its 2015 budget as global growth slows down
Razon was not optimistic about global growth

Philippines-based port operator International Container Terminal Services Inc. (ICTSI) has revealed that it expects to spend only half of its US$530m established budget for this year and limit expansion plans as global growth is slowing down.

The company’s chairman and president, Enrique Razon, told Bloomberg that “the growth picture of the global economy is not looking too great,” adding that the port operator’s profit is mostly due to the acquisition of new terminals rather than to organic growth.

The terminal management company reported in August that its capital expenditures for the first six months of the year amounted to US$136.7m, which is around 26% of the US$530m planned budget for the full year of 2015.

The initial budget was mainly allocated to complete the development of the company’s new container terminals in Mexico, Honduras and Iraq, as well as to expand capacity in its terminal operation in Manila and to start the development of new terminals in Australia and the Democratic Republic of Congo.

In its results for the first half of 2015, the terminal operator reported an 8% increase in revenue from port operations to US$552m from US$510m in the same period last year.

The group handled 3.8m teu during the first six months of 2015, a 9% increase on 2014, mainly due to continuing volume increases at its terminals Contecon Manzanillo S.A. (CMSA) in Manzanillo, Mexico and Operadora Portuaria Centroamericana, S.A. de C.V. (OPC) in Puerto Cortez, Honduras.

New shipping line contracts and services at Pakistan International Container Terminal (PICT) in Karachi, increased demand at Subic Bay International Terminal Corp. (SBITC) in the Philippines, as well as consolidation at Yantai International Container Terminal (YICT) in China and the contribution of the company’s new terminal in Basra, Iraq, added to the increase.

According to Bloomberg, Razon said that the company is still not sure whether it will bid for the 17 billion-peso (US$364m) project to modernize the Davao Sasa seaport in the southern Philippines, adding that he could be interested in investing in airports as well.