The Tribune

• Nassau import volumes back to pre-pandemic in Q1 2022

• But BISX-listed gateway ‘remains extremely conservative’

• Even though net income 56% above target year-to-date

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau’s major commercial shipping port is forecasting a 7 percent year-over-year profit decline for 2022 despite predicting container volumes will return to pre-COVID levels in the first quarter.

Arawak Port Development Company (APD), the BISX-listed Nassau Container Port operator, made the relatively conservative forecast in its just-released annual report even though net income for the first quarter of its current financial year was 56 percent or almost $750,000 ahead of internal forecasts.

“For the 2022 fiscal year, we are budgeting gross revenue of $28.618m (2021: $28.775m) or 1 percent less than the prior year’s actual gross revenue,” APD told its shareholders. “Net income is projected to be approximately $6.208m or approximately $464,008 less than the 2021 actual net income of $6.672m.

“The decline in revenues, net income and volumes are solely attributable to the negative impact of COVID-19 on our local economy, especially our tourism sector. Our 2022 fiscal year budget assumes that volumes would start to recover to pre COVID-19 levels in the first quarter (January to March) of 2022.”

APD, which is estimated to handle around 90 percent of all freight imported to New Providence, is a good indicator of how the overall Bahamian economy is performing given the link between import volumes, consumer demand and the level of construction/foreign direct investment (FDI) activity taking place.

The company’s annual report revealed that both revenues and profits for the three months to end-September 2021, which represents the first quarter in a financial year that closes at end-June 2022, were ahead of projections by double digit percentages. 

“Our net income is currently 56 percent or $741,664 over budget as of September 30, 2021.This is mainly attributed to an increase in terminal handling fees and stevedoring fees associated with cargo projects during the year,” APD management told investors.

It cited the Nassau Cruise Port and downtown redevelopment; the US Embassy; GoldWynn Condo-Hotel and Residences; The Pointe; Sandals’ Royal Bahamian renovations; Albany and the Hurricane Hole marina as examples of construction/FDI projects that have underpinned import volumes passing through the Arawak Cay-based port amid depressed consumer demand.

“Management remains extremely conservative, and yet optimistic, on the Atlantis Royal Towers renovations, South Ocean resort and the Palm Cay project. Due to COVID-19 our financial year 2022 budget assumed container [volumes] would trend below the pre COVID-19 volumes until at least first quarter 2022,” APD’s annual report added.

“Total market volumes have decreased because of COVID-19, and are estimated to be around 127,000 TEUs (twenty-foot equivalent units) for 2022 or 1,066 TEUs under the 2021 budgeted volumes of 125,934 TEUs. Our total revenues for the period ended September 30, 2021, are over budget by approximately $689,059 or 10 percent.

“Total expenses for the period ended September 30, 2021, were under budget by $465,588. The total revenue increase was largely attributable to an increase in terminal handling and stevedoring fees associated with cargo projects. Total expense decrease was mainly attributed to a reduction in actual spending versus budget for the period.”

Striking a more optimistic tone, APD added: “By the end of the fiscal year [2021, it was evident that the wheels of the Bahamian economy had begun to turn and re-opening was picking up speed.

“If it can maintain this momentum, and if the Budget measures the Government announced in June take effect, we can cautiously anticipate a recovery in APD’s import volumes by the end of the calendar year, going into the first quarter of next year.”

It continued: “We are pleased that first quarter financial year 2022 bulk aggregate numbers are up by about 18 percent over budget, driven primarily by the project cargo that comes in and tonnage in non-containerised cargo, which included heavy equipment and materials such as sheet piles that are being used for the Nassau Cruise Port’s $250m transformation project.

“The hotels have now committed to opening up for the winter season. In all likelihood, this will influence suppliers like Bahamas Food Services (BFS) and members of the Bahamas Wholesalers Association to increase volumes to supply those resorts.”

The APD annual report said no Board decision had been taken on dividend payments for the 2020-2021 financial year, the last such capital return to shareholders having taken place in December 2020.

Turning to the company’s performance for the year to end-June 2021, it added: “Nassau Container Port processed 118,962 (2020: 129,694) inbound/outbound TEUs. This represents an 8 percent decline in container volumes under 2020 volumes of 129,694 TEUs.

“Our volumes are approximately 17 percent below our 2019 pre COVID-19 volumes of 131,734 TEUs. In the 2021 financial year, APD exceeded budgeted net income projections. Budgeted net income was $5.831m while actual net income for 2021 was $6.672m, which is $840,833 or 14 percent more than budget.

“The Company’s total revenues for 2021 were $28.775m (2020: $31.16m), which is $2.385m or 8 percent lower than the prior year. Net income for 2021 totaled $6.672m (2020: $7.23m) or 8 percent lower than the prior year.

“Our Direct Operating Margin (DOM) for 2021 was 51 percent (2020: 50 percent). Our budgeted DOM for 2021 was 49 percent. For the period ended September 30, 2021, our DOM is 56 percent, which is 11 percent more than our budgeted DOM for the same period.”

Breaking down import volumes by category, APD said: “Bulk car volumes of 8,694 were 173 or 2 percent more than 2021 budgeted car volumes of 8,521. This resulted in revenues of approximately $1.649m from landing and security fees for vehicles.

“Additionally, revenues from storage fees were approximately 49 percent over budget during financial year 2021. Stevedoring revenue was over budget by $206,596 during financial year 2021, mainly attributable to project related cargo.”