The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Arawak Port Development Company (APD) yesterday revealed it had exceeded profit projections for its 2015 financial year by 33 per cent, aided by its first-ever tariff increase and rises in storage and rental revenues.

The BISX-listed operator of the Nassau Container Port told Tribune Business that top-line revenues for the year to end-June 2015 had beaten its forecasts by 7 per cent, while holdings costs relatively flat against budget.

“Overall earnings exceeded Budget by about 33 per cent,” said Dion Bethell, APD’s chief financial officer. “Our budgeted earnings were $5.07 million, but total comprehensive income was $6.753 million. That was a $1.682 million, or 33 per cent, difference.”

Mr Bethell said the port’s better-than-expected profit performance was “largely driven” by significant increases in key revenue streams, with landing fees rising by 27.7 per cent year-over-year - from $9.515 million in 2014 to $12.152 million now.

Michael Maura, APD’s chief executive, confirmed that the rise had been aided by the $28 per TEU tariff increase, the first in the port’s history, since it began operations in November 2011. APD’s financials thus reflect a full year of the increase, introduced in June 2014, which took TEU tariffs from $120 per container to $148.

Mr Bethell, meanwhile, said the company was “somewhat surprised” by the 38.6 per cent year-over-year increase in storage fees to $2.916 million compared to $2.104 million the year before.

He explained that these fees are dictated by the importer, and whether they allow their containers and cargo to remain at the Port “beyond the allotted time”.

When this happens, APD starts levying fees, as expensive equipment is required to move shipping containers whenever operators need to access others placed in a stack on the dock.

This can lead to containers being moved up to 10 times’ a day - an expensive undertaking, especially of importers and their clients are tardy in moving them.

Mr Bethell also confirmed that APD benefited from a full year of rental revenues at its Nassau Maritime Centre headquarters on Arawak Cay, which was only used for three months of its 2014 financial year.

Although the year-over-year comparatives are somewhat misleading, APD’s rental or ‘sublease’ revenues jumped by 59 per cent - from $841,067 to $1.338 million.

The various increases drove a 15.2 per cent rise in APD’s total revenues, from $25.758 million to $29.669 million year-over-year. Expenses were much flatter, growing by just 4.3 per cent to $17.4 million, compared to $16.677 million in 2014.

As a result, earnings before interest and finance costs jumped from $6.161 million to $8.964 million, an increase of 45.5 per cent.

And total comprehensive income grew from $3.616 million in 2014 to $6.753 million, a rise of 86.8 per cent. Earnings per share (EPS) jumped from $0.72 per share to $1.35.

Mr Maura told Tribune Business that the Arawak Cay-based port had witnessed a 2 per cent year-over-year rise in twenty-foot equivalent unit (TEU) container import volumes, as the Baha Mar project switched from aggregate to other construction materials prior to its stalling in February/March.

These grew from 67,035 imported TEUs in 2014 to 68,380 last year, with Mr Maura describing cargo imported through the Nassau Container Port as a key indicator of the activities taking place in the Bahamian economy.

“What’s interesting about our business is that through the eyes of the port, and the types of cargo that come across our bulkhead, we’re able to see the evolution of construction and development,” the APD chief executive explained.

Mr Maura said aggregate volumes imported through the Arawak Cay port had dropped by more than 50 per cent between 2012 and APD’s last financial year, falling from 800,000 tonnes to 369,000 tonnes.

He added that this was explained by the change in construction emphasis on the $3.5 billion Baha Mar project, which switched from concrete needed to pour the foundations and super-structure to more cargo-based items such as furniture, fixtures, equipment and dry wall.

“As aggregate volumes declined, we expected - and did see - an increase in container volumes by 2 per cent,” Mr Maura said.

Further explaining APD’s decision to cease Saturday operations, Mr Maura said the port had been processing around one-ninth or 11.5 per cent of the cargo volumes it had been handling during the week.

He told this newspaper that the cessation had the potential to save the Port, and the companies using it, a collective $0.5 million per year.

The decision to end Saturday operations was based on “good, sound port management”, Mr Maura said.

“On any given Saturday, even when Baha Mar was going, we were only handling 22 containers a day,” he revealed to Tribune Business, compared to a 192 daily average between Monday and Friday.

“For this whole facility, 57 acres, to keep the lights on and everyone at the ready for 22 containers did not make any economic sense,” Mr Maura added.

“With the suspension of the Saturday, that is one that has the potential to reduce overall port operating expenses by approximately $0.5 million.

“When I say overall, I’m including APD, Tropical Shipping, Betty K and Arawak Stevedoring in that as well.”

Mr Maura, though, pledged that the Nassau Container Port would still be open to receiving vessels docking at its facilities on the weekend.

And Mr Bethell said APD “may revisit” Saturday openings if seasonal demanded merited it, such as at Christmas time.

The APD chief financial officer added that the company’s $35.378 million preference share issue had cut the interest rates on its borrowed capital by two full percentage points, freeing up some $350,000 to drop to its bottom line and equity shareholders.

APD’s interest expense fell by 60.2 per cent year-over-year, from $582,098 to $231,419, due to the 5 per cent interest coupon attached to its bank debt, and 5.5 per cent rate on the preference shares.