The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port’s (NCP) operator has beaten its own profit forecast for the 2016 financial year by 23 per cent, with higher-than-projected auto imports enabling it to mitigate the fall-off in Baha Mar volumes.

Arawak Port Development Company (APD), unveiling its results for the 12 months to end-June 2016, closed the year with profits more than $800,000 ahead of what it had originally estimated.

Michael Maura, APD’s chief executive, told Tribune Business that a 5,180 year-over-year rise in automobile imports, coupled with a $63 per vehicle rate increase, ensured total revenues finished 3.2 per cent higher than projected.

Replying to this newspaper’s e-mailed questions, Mr Maura said the combination of a rate increase, and auto imports finishing 1,905 vehicles above budget, added just over $300,000 extra to APD’s ‘bottom line’.

“Overall revenues were $27.08 million or 3.2 per cent over budget, driven primarily by a combination of an increase in bulk auto volumes,” Mr Maura told Tribune Business, “over prior year by 5,180 and budget by 1,905, and a general rate increase on bulk autos of $63 per vehicle, which took effect on September 1, 2015.

“The increase was necessary to harmonise the port rates between containerised vehicles and bulk vehicles landed at NCP.”

Mr Maura added that the extra 1,905 vehicles “equate to an estimated contribution to comprehensive income of a little over $300,000”.

The company also benefited from 12 unbudgeted project vessel calls, which had a noticeable contribution,” he said.

“We also realised a significant gain due to a spike in vessel calls outside of the port’s regular operating hours, and requests for the port to remain open after 4pm.”

APD had effectively delivered a profit warning to shareholders for 2016 when it released its annual report for the prior year, predicting that net income would be down 48 per cent to $3.526 million - some $3.227 million below 2015’s $6.753 million.

However, the magnitude of the ‘profit slide’ turned out to be much less, as the BISX-listed port operator generated actual full-year net income of $4.338 million - some 23 per cent higher than forecast.

This, though, was still some 35.8 per cent (more than one-third) down on 2015 figures - something Mr Maura said APD had anticipated, as a result of Baha Mar moving from its construction phase to hotel operations.

What had not been forecast, though, was the $3.5 billion project’s collapse into Chapter 11 bankruptcy proceedings, then provisional liquidation and receivership, as a result of the dispute between the developer and his Chinese partners.

Mr Maura told Tribune Business that this shaved a further 5 per cent off container (twenty-foot equivalent units or TEUs) throughput volumes at the Arawak Cay-based port, taking the total decline to 10 per cent.

Baha Mar’s woes also resulted in an almost-60 per cent drop in APD’s storage revenues year-over-year, as the project’s contractors had used the port as a “storage yard”.

Explaining the $2.5 million year-over-year fall in port operator’s revenues from $29.669 million, Mr Maura said: “The greatest factor is Baha Mar, both from a container volume and associated revenue standpoint, and also a container storage perspective.

“Had the project continued, we had anticipated approximately a 5 per cent reduction in container volumes as the resort transitioned from construction to operations.

“The placement in provisional liquidation resulted in a further 5 per cent reduction in container volumes, bringing our total volume decline to approximately 10 per cent. We would expect the 5 per cent associated with hotel operation volumes to gradually return at some point in the future.”

On the storage side, Mr Maura added: “The Baha Mar project, and specifically its contractors, used the Nassau Container Port as a container storage yard.

“During the 2014-2015 fiscal year, APD storage income amounted to $2.9 million. As noted, the demise of the Baha Mar project contributed to the decline in storage revenue by approximately $1.7 million.”

Mr Maura also revealed that APD had finished its 2016 financial year almost ‘spot on’ in terms of projected TEU throughput volumes.

“We finished the year 278 TEUs over budget. I was very close,” he added.

APD, in its 2015 annual report, had previously warned: “Our TEU volumes are currently on budget as at August 31, 2015. However, we are doubtful of any project cargo volumes this year. The main project, Baha Mar, is at a standstill and the Hilton and Albany projects are in the very early stages.

“Due to this, we do not foresee any significant project volumes during financial year 2016. With the current Baha Mar situation, we feel that total market volumes will be around 61,500 TEUs for 2016 or 6,880 under the 2015 TEU volumes of 68,380 TEUs.”

APD’s 2016 financial showed that the company had managed to hold expenses flat year-over-year, containing them to $17.202 million - a slight drop from the prior year’s $17.4 million.

However, this was not enough to offset the revenue decline, with earnings before interest, depreciation and amortisation (EBITDA) declining by 19.5 per cent to $9.878 million compared to $12.269 million the year before.

Earnings per share (EPS) fell from $1.35 per share in the 2015 financial year to $0.87 per share in 2016. With the total dividend payout to ordinary shareholders standing at $4.997 million, slightly more than APD’s profits, the company’s retained earnings declined by just under $600,000 to $5.421 million.

However, total net shareholders’ equity (the value held by the shipping industry and the Government with their 40 per cent stakes, and the public investors at 20 per cent) remained at a healthy $54.664 million.