The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port’s operator has beaten 2019 first-half profit expectations by $120,000 as it delivered on forecasts of a financial performance that will match 2018.

Michael Maura, chief executive of Arawak Port Development Company (APD), told Tribune Business that lower depreciation and finance charges kept it ahead of projections for the six months to end-December 2018 despite revenues and expenses both coming in lower than anticipated.

He added that there was a noticeable first-half drop in vehicle imports, which were 2,000 below prior year comparatives - and 800 less than projections - by coming in at 7,700.

Disclosing that the operator of New Providence’s main commercial shipping port did not see “any material change” to these trends for the rest of its 2019 financial year, which closes at end-June, Mr Maura said: “Revenues for the first two quarters were $15.5m or approximately $650,000 under prior year, but $350,000 under budget.

“Expenses for the first six months were approximately $8.9m or $300,000 under budget, with the reduction shared across salaries, terminal handling costs and legal and professional fees. Income for the first half was $4m or $120,000 over budget, due in part to lower than expected depreciation and finance expenses.”

APD’s total comprehensive income for the six months to end-December 2018 was $4.027m compared to $4.359m the prior year, representing a drop of $322,000 or 7.4 percent.

Earnings per share (EPS) fell from $0.87 to $0.81 year-over-year, as revenues fell from $16.144m to $15.476 - a decline of 4.2 percent. Revenues were flat in almost all categories apart from storage fees, which dropped 48 percent year-over-year to $596,711.

“Storage revenues have historically been quite strong, and have been fed by import and export containers, break bulk cargo and vehicles remaining in port beyond the permitted free time,” Mr Maura told Tribune Business.

“The reduction in storage has been primarily caused by a reduction in export containers remaining in port past their 10 free days, along with Bahamas Customs warehousing vehicles which have not been cleared by the seventh day following landing. The decline in export storage, while unfortunate from an APD financial perspective, actually represents improved container management by the ocean carriers.”

Turning to container volumes, Mr Maura said APD handled total round-trip twenty-foot equivalent units (TEUs) totalling around 67,000 for the first half of its financial year. This was down 150 against the prior year, but around 80 ahead of 2019 budget projections.

Revealing a sharp decline in vehicle imports, he added: “Vehicle imports were approximately 7,700, or approximately 800 under budget and an estimated 2,000 under prior year.

“Bulk aggregate volume reporting is heavily dependent on timing due to only receiving approximately three or four 30,000 ST (solid tonne) dry bulk aggregate shipments per year. During the first half of the year APD received approximately 100 ST or close to 50,000 ST more then prior year same period.”

APD had $13.746m in cash and equivalents sitting on its balance sheet at year-end 2018, and Mr Maura said some of these monies could be deployed to finance development of a 15-acre site on the company’s southern Arawak boundary if it gets the go-ahead from the Government.

“We have a number of important projects and initiatives before us,” he told Tribune Business. “We continue to wait on the Government to advise if our application to develop 15 acres of property immediately along our southern boundary is approved.

“This will result in some expenditure during this year. The 15-acre project, which considers a vehicle terminal, a Customs cargo inspection facility and other port facilities would require funding, and the board will determine how much cash would be used. Earlier we had used our strong cash position to retire our long-term Royal Bank of Canada debt.

“We continue to support and invest in the Government’s Electronic Single Window trade system. This Customs project is behind schedule, but we understand it will be launched in the next quarter. We will be launching a 10th anniversary promotional campaign, which will require expenditure beginning in April. While these efforts will incur costs we will continue exercising a conservative approach to our daily operations.”

Mr Maura said APD continued to explore other port opportunities in the Caribbean, and the possibility of offering liquefied natural gas (LNG) bunkering services to cruise ships while docked in Nassau, both as a means to diversify and benefit consumers through a reduced cost of goods.

“APD is bound to a 10 percent IRR, and any incremental income we can generate from new business activities serves to subsidise our core business of handling groceries, building materials, household goods and many other essential goods,” he explained.

“It is in the national interest to support APD’s diversification as it benefits the New Providence community and economy. Allowing APD to expand into new ventures does not increase profits to the benefit of shareholders, as the business income opportunity is capped by the Internal Rate of Return framework.

“It does, however, build greater shareholder security as the business would diversify and not be entirely dependent on cargo throughput. So the answer to the question is that APD’s diversification should be a national priority.”