The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau's main commercial shipping port yesterday predicted it will suffer a "flat" 2020 full year after container import volumes for May to-date dropped by around 40 percent compared to the prior year.

Dion Bethell, Arawak Port Development Company's (APD) president and chief financial officer, told Tribune Business it was impossible to predict when the "the downward trend" caused by the COVID-19 pandemic would bottom out and reverse.

Although major construction projects, a key driver of throughput volumes at APD's Nassau Container Port (NCP) facility, have resumed, Mr Bethell said subsequent bulk imports have yet to make up for April's 88 percent decline when that sector was closed.

With April's Twenty-Foot Equivalent Unit (TEU) volumes down against both internal forecasts and 2019 comparatives by around 38 percent, the APD chief added that the BISX-listed port operator also relinquished "north of $1m" in revenue through the month-long 50 percent cut to all its tariff fees. As a result, April's revenues were down 51 percent year-over-year.

Disclosing that APD believed the slash passed some savings on to hard-pressed Bahamian consumers, Mr Bethell said the company's board of directors was "some way out" from determining whether dividend payments to shareholders will be impacted by the COVID-19 fall-out.

The pandemic's full impact on APD will be felt in the company's results for the fourth and final quarter of a financial year that closes at end-June 2020. "We've already started to see the downward trend," Mr Bethell told Tribune Business. "In April [container] volumes were off by 38 percent, and on the tonnage side they were down by 88 percent.

"That was primarily because of the bulk plant, the bulk terminal, was pretty much closed. We had a big bulk carrier that brought some volumes in during May, but that was not a home run. It made up for some of the shortfall, but was nowhere near for making up for the deficiency.

"The shipping carriers, when we look at their volumes even now, and the bookings, they continue to be on the 40 percent downward trend. That's across the board. A lot of commodities coming in are grocery supplies, a limited amount of building materials, mainly lumber, some small volumes for the nurseries, and a lot of medical supplies for the hospitals. They continue to come in."

APD's own data shows TEU container volumes dropped by more than 2,200 year-over-year in April. They fell from the 5,815 received in 2019 to just 3,620 this year, which was also a drop of 2,139 against APD's own internal projections of 5,759 for the month.

"We continue to see that trend now into May, where we're around 40 percent below budget forecasts and the prior year," Mr Bethell added of TEU container volumes. APD remains some 3,798 ahead of target for the first nine months of its present financial year, but the stalling of major foreign direct investment (FDI) construction projects - a major import driver - due to COVID-19 is set to continue impacting its financials near-term.

With the timing of any rebound in APD's container volumes, which are a key indicator of the Bahamian economy's health, uncertain, he added that developments such as the new US Embassy, GoldWynn and Sterling's Hurricane Hole transformation - both of which have restarted - are critical to driving imports. Vehicle imports for March and April, despite coming in at a "steady inflow", had also been below expectations.

And, with the Government in the early stages of its COVID-19 economic re-opening plan, Mr Bethell said there had also been a decline in building materials demand and "general merchandise commodities" from the domestic economy. He added that the likes of Kelly's Home Centre were all still selling from existing inventories that had been imported and built-up prior to the economic lockdown.

"We remain optimistic, cautiously optimistic, as to when these trends will be over," he added, pointing out that the month-long 50 percent discount to APD's tariff fees (now over) had been intended to "benefit the entire market" - especially grocery stores and their customers - at a time when they needed all the financial assistance they could get in the pandemic's early stages.

"We felt our obligation was met in passing those savings on to the market," Mr Bethell added. "The focus was on keeping the commerce moving, and ensure that confidence in the food stores remained high. Many were panic buying."

He said APD now expects its 2020 full year to be "relatively flat" against both prior year comparatives and internal forecasts given the drop in import volumes and uncertainty over when these will recover. "If these picked up it would be good, but for the time being we're forecasting a flat year year-over-year and flat versus budget," Mr Bethell added.

Given that APD's total comprehensive income stood at $7.905m for the nine months to end-March 2020, this suggests the Arawak Cay-based port operator will make either a small fourth quarter loss or break even. Its nine month profits are just behind the $8.03m recorded for the 2019-full year, and ahead of the $7.267m in net income projected at the start of the financial year.

APD said in a statement yesterday that it is bracing for an economic environment where the Bahamian economy contracts by up to 20 percent, with unemployment hitting at least 30 percent and government revenues declining by 50 percent.

"While our financial results as of March 31, 2020, are favourable and performing above budget and over prior year-to-date March 2019 results, the reality of the economy and financial performance for April/May 2020 is very different from year-to-date March 2020," Mr Bethell added.

"We continue to evaluate information from global and local sources concerning COVID-19 with the intent of having our facilities continue to operate at optimum level in a manner that will not affect trade while ensuring a high level of awareness and efficiency."

For the 2020 financial year to end-March, APD's revenues increased by 13 percent year-over-year to $25.5m compared to $22.6m last year. This was also 14 percent ahead of budget. Net income was 41 percent ahead of the prior year's $5.6m.

In terms of volume, APD said TEU volumes for the first nine months were were 8 percent than 2019 comparatives. Tonnage volumes were 33 percent higher, and vehicle volumes 13 percent higher.

"These are unprecedented times and uncharted waters," Mr Bethell added. "We must 'trim our sails' given that we don't know what the weather is like ahead and how long this global crisis will last. The impact of unemployment forecasted to be as high as 30 percent, and the overall financial impact on our economy could be potentially devastating, but I am certain the 'tides will turn' and we will rebound."