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ICTSI’s first quarter results hit by COVID-19 impact

ICTSI’s first quarter results hit by COVID-19 impact
Capital expenditure was mainly used for ongoing improvements at various terminals

The impact of COVID-19 has been reflected in International Container Terminal Services Inc. (ICTSI) results for the first quarter of 2020 as net income drops 18% to US$59.6m.

In addition to COVID-19 related expenses, a lower operating income and an increase in interest on concession rights contributed to the disparity between the US$72.4m recorded in the same period last year.

Enrique K. Razon Jr., ICTSI chairman and president, said: “For many people around the world, livelihoods have been severely impacted by the outbreak of COVID-19.

“This pandemic is having, and will continue to have, devastating effects on our societies and it will take a significant amount of combined effort from organisations, governments and individuals to bring back some degree of normality.”

Container volume was relatively on par with 2019, up 1% from 2,478,672 teu to 2,508,986 teu for the quarter ended March 31, 2020.

Razon Jr. added: “The effect of the virus was felt in the latter part of the first quarter, and our volumes compared to the previous year were largely flat. Regions are at different stages of the viral outbreak which is reflected in our portfolio performance.

“Asia delivered lower volumes compared to the previous year while the EMEA and Americas segments both still registered positive volume growth for the quarter. However, the latter two regions showed signs of weakness in March.”

The slight increase in volume was primarily due to the contribution of a new terminal in Rio de Janeiro in Brazil and new services at certain terminals; tapered by a decline in trade activities due to COVID-19.

Excluding the contribution of ICTSI Rio, consolidated organic volume would have decreased by 1% for the first quarter of 2020.

ICTSI Rio also had a positive effect on gross revenues which decreased 2% to US$375.8m from US$383.8m in 2019 due to a decline in trade activities, lockdown restrictions and lower revenues from storage.

Without the contribution of ICTSI Rio, consolidated organic gross revenues would have decreased by 5% in the first quarter of 2020.

Consolidated Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was 5% lower than the US$222.5m generated in the first quarter of 2019 mainly due to lower operating revenues, partially tapered by the positive contribution of Rio.

Consequently, EBITDA margin decreased to 56% from 58% in the same period in 2019.

Consolidated cash operating expenses in the first quarter of 2020 was 6% higher year-on-year at US$119m compared to US$112m, mainly due to ICTSI Rio, government-mandated and contracted salary rate adjustments at certain terminals and an increase in IT-related expenses.

Capital expenditures for the first three months of 2020 were mainly for the ongoing expansions at terminals in the Philippines, Mexico and the Democratic Republic of Congo, which amounted to US$59.7m (excluding capitalised borrowing costs).