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ICTSI increases throughput and revenues but net income declines

Pictured: Manila International Container Terminal; Photo by ICTSI

Manila, Philippines-headquartered global marine container terminal operator ICTSI (PSE: ICT) has reported increased container throughput and revenues in the third quarter of 2019 when compared to the same period last year. Net income marginally declined. On a nine-month basis, the company is powering ahead.

Third-quarter revenues from operations were $355.56 million, while net income after tax was just under $56.4 million.

“ICTSI has continued to deliver strong financial performance driven by organic volume growth, diligent cost management and the continued ramp-up of newer terminals. Positive progress has been made across the business, which in part has been enabled by the prudent investments we make in our brownfield terminals,” said Enrique K. Razon, the chairman and president of the company.

ICTSI’s third-quarter results are unaudited and the company reports in U.S. dollars.


ICTSI reported consolidated gross revenues of $355.55 million from port operations in the three months ending Sept. 30, which is a year-on-year increase of 3.37% on the prior corresponding period in 2018. That’s an increase in absolute terms of just under $9.14 million.

The company also released nine-month results ending, again, on Sept. 30. In the nine-month period, consolidated revenues from port operations rose by 10.10% to $1.11 billion. In absolute terms, the company has generated $101.62 million more revenues so far this year compared to last.

ICTSI attributed revenue growth to strong performance from terminals in the Democratic Republic of Congo, Iraq, Mexico, the Philippines, Australia and Papua New Guinea.

Total income for the nine-month period also was boosted by $17.88 million of interest income and $10.41 million of other income. These amounts derived from transactions such as the receipt of interest on cash account, government grants and from investments in affiliates.

Expenses and profit

ICTSI experienced a general operational cost increase of about 2.86% in the third quarter of the year to a little under $289.91 million, which, in absolute terms is a year-on-year increase in cost of about $8.07 million between the two periods.

The single biggest quarterly expense was depreciation and amortization at $57.79 million. That was followed by labor costs of $55.42 million. Depreciation and amortization expenses rose by 3.94 year-on-year, a $2.19 million increase, while manpower costs rose 2.09%, a $1.13 million cost increase. Labor costs rose, in part, because of government-mandated and contracted salary rate adjustments “at certain terminals.”

Other noteworthy expenses in the third quarter were interest and financing charges on loans, which rose by just under $2 million to $28.03 million, along with a roughly $4.5 million increase in “other expenses” to $7.54 million. These were associated with a wide range of debt-related transactions (both issuance and repayment) to and from numerous lenders around the world as the company invested and financially managed its global portfolio. This included the partial prepayment of a euro-denominated loan.

On a nine-month basis, ICTSI’s expenses in the year to date stood at $878.04 million, a 3.71% rise.

Net income for the three months to September stood at $58.90 million, a fall of 1.74% but, on a nine-month basis, net income has surged by 25.10% to $204.97 million — that’s an increase in net profit of about $41.12 million.

Meanwhile, the company noted that capital expenditure (excluding capitalized borrowing costs) for the first nine months of the year stood at $177.7 million, which is about 47% of the $380 million allocated for the full calendar year.

“The estimated capital expenditure budget will be utilized mainly for the ongoing expansion projects in Manila, Mexico and Iraq; equipment acquisitions and upgrades; and for maintenance requirements,” the company said in its financial report.

Container throughput

Globally, ICTSI handled a little under 2.55 million ocean shipping containers (as measured in twenty-foot equivalent units or TEUs) in the three months to September, which is 5% higher than the prior corresponding period in 2018.

On a nine-month basis, ICTSI had a consolidated throughput of 7.59 million TEUs, which is 6% more than the prior corresponding period in 2017. The company attributed the throughput growth to a “continuing ramp-up” at ICTSI’s new terminals in Lae and Motukea (both in Papua, New Guinea) along with an improvement in trade in the Philippines, the Congo and in Iraq. New contracts with shipping lines boosted volumes in Australia, Poland, Croatia and Mexico.

ICTSI wins big in ICTSI vs ILWU

As previously reported by Freightwaves, the company’s U.S. subsidiary, ICTSI Oregon, has been in the news this month after a jury verdict in the U.S. District Court in Portland, Oregon, awarded the company $93.6 million in damages from the International Longshore and Warehouse Union and its Local 8 in Portland.

After a 10-day trial, the jury found the union had engaged in unlawful labor practices that were a substantial factor in causing damage to the ICTSI. The company had said slowdowns and other tactics by the union and Local 8 caused container carriers to cease calling Portland, where it operated the port’s only container terminal.

According to the American Bar Association, a verdict of a U.S. jury in a civil trial (i.e. a non-criminal trial) does not take effect until the court enters a judgment. In civil cases, the court may have the power to carry out certain post-verdict acts, such as hearing motions or increasing / decreasing the amount of money that has to be paid. 

Judge Michael Simon on Nov. 8 agreed to delay entry of judgment and to hear post-verdict motions from the International Longshore and Warehouse Union. The judge said, “The amount of damages found by the jury is quite high and may result in the bankruptcy of a union that traces its beginnings to at least 1933 and arguably into the 19th century.” And he said a remittitur motion to reduce judgment “may raise serious arguments.”

In its latest earnings update, ICTSI commented that, “Briefing on those motions will likely be completed by December 2019 and a decision is likely in 2020.” 

Backgrounder: about ICTSI

Founded in 1987 in relation to the privatization of the Manila International Container Terminal, ICTSI says that its business is the “acquisition, development, operation and management of container terminals focusing on facilities with a total annual throughput ranging from 50,000 to 3,000,000 twenty-foot equivalent units.”

The company also provides a variety of ancillary services such as storage, container packing and unpacking, inspection and other container services.

ICTSI is involved in 32 terminal concessions and port development projects in 18 countries around the world.

Read more stories by Jim Wilson. Jim is based in Australia but he mostly covers Asia’s maritime sectors. He can be reached with comments, suggestions and tips via [email protected].

Freightwaves reporter Chris Dupin also contributed to this story.

November 14, 2019: this story was updated to edit the phrase “net income slipped into the red” because, as the story itself made clear, ICTSI’s net income marginally declined. We unreservedly apologise to ICTSI for the error. Sorry.