The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Nassau Container Port's chief executive yesterday said it "will take something quite significant to repeat" 2017's 157 per cent profits rise, which received a $1.1 million Baha Mar boost.

Michael Maura told Tribune Business that Baha Mar's remobilisation, and settlement of pre-Chapter 11 debts, meant that Arawak Port Development Company (APD) was able to recover rent owed at its Gladstone Road Freight Terminal (GFT).

With no such one-off cost recovery anticipated for the BISX-listed port operator's current financial year, Mr Maura indicated it would be tough for APD to match the record net income performance for the 12 months to end-June 2017.

He added, though, that several government-related projects - Bahamas Power & Light's (BPL) temporary generation tender, and the redevelopment of Prince George's Wharf - could raise the Arawak Cay port operator's earnings to similar heights if they materialise.

APD's total comprehensive income more than doubled, and was not far from tripling, as revenues increased in almost every category during its 2017 financial year, while expenses dropped due to the Baha Mar recovery.

The BISX-listed port operator saw its 'bottom line' soar from $4.338 million in 2016 to $11.171 million for the 12 months to end-June, with earnings per share (EPS) rising from $0.87 per share to $2.24 per share.

"I don't know if we can match it," Mr Maura told Tribune Business of APD's 2018 prospects. "As Baha Mar came back online, and Chow Tai Fook Enterprises (CTFE) came into the picture, we were very fortunate to recover the rents due for the Gladstone Freight Terminal.

"We were able to recover storage [fees] from carriers owed by the project. We had in the neighbourhood of $1.1 million that fell to the bottom line from Baha Mar that was specific to the rent at GFT."

Baha Mar's financials showed a $1.212 million bad debt 'reversal' year-over-year, with a $513,000 'expense' in 2016 transformed into a $700,000 'recovery' in 2017.

Mr Maura confirmed that related entirely to the Baha Mar-related rent due at GFT, with the $1.2 million 'reversal' almost entirely responsible for the 7.4 per cent year-over-year fall in APD's costs from $17.202 million to $15.925 million.

Although not incorporated into APD's 2018 budget and financial projections, Mr Maura said there were several potential projects that could boost the Arawak Cay port's performance to similar levels if they come to fruition.

"Some of the things that could potentially materialise are projects the Government controls," he told Tribune Business, "one of which is BPL. They have a tender that is out right now for supplementary power. That tender is due on November."

Mr Maura was referring to the bidding process to supply BPL with 80 Mega Watts (MW) or temporary (rental) generation capacity for five years, other contacts having corroborated that bids are due by 4pm this Friday.

The APD chief added that he understood the tender was not "restrictive", meaning that bidders could propose an extended or longer-term supply contract, and even offer long-term generation solutions for addressing BPL's woes. This, too, has been confirmed by other Tribune Business contacts familiar with the BPL Request for Proposal (RFP).

"That has not been factored into our Port budget, but those generators have to come across our bulkhead," Mr Maura explained. "The other project that I understand the Government may be looking at is the future redevelopment of Prince George's Wharf. That would drive a considerable amount of business for us that's not contemplated in our budget.

"There are a few significant projects that could materialise, or begin to, this fiscal year, which could have a pretty significant impact on the company and help us to get to the level we've just experienced.

"Obviously there is no $1.1 million in outstanding storage that we have today; all in-house rents are current. It would take something quite significant to repeat these numbers just realised."

APD's total revenues rose by 20.2 per cent or more than $5 million year-over-year, jumping from $27.08 million in 2016 to $32.551 million. Earnings before depreciation and amortisation increased by 68.3 per cent to $16.627 million, while earning before interest more than doubled from $6.525 million to $13.325 million.

"We did see a bump in business from the remobilisation of Baha Mar," Mr Maura confirmed. "We saw a spike in business as a result of construction materials specific to the hurricane. We also saw a spike in our bulk vehicle imports, and they would have been the biggest drivers of business - cargo volumes - for us."

Mr Maura said APD never budgeted for the income and expenditure impacts of hurricanes, but its financial performance had been aided the past two years by "construction materials going across the bulkhead" to assist with Joaquin and Matthew rebuilding.

"If you bring a container across the bulkhead, it's going to touch 90 per cent of our tariff lines," he told Tribune Business.

"If you look back over the last several years, you would have seen a decline in port storage as a result of carriers and merchants getting cargo off the dock, and we've seen an improvement from the carriers in clearing their empties. There's been improved cargo management from importers and exporters."

The Nassau Container Port, which is effectively a 'natural monopoly', has a 20-year, government-granted exclusivity as New Providence's commercial shipping port. Both the Government and shipping industry each hold 40 per cent of its equity, with the remaining 20 per cent held by Bahamian public investors.