The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau’s major commercial shipping port has no plans to increase tariffs “in the near term”, its top executive has affirmed, after operating income increased by $1m in its 2022 first quarter.

Dion Bethell, Arawak Port Development Company’s (APD) president and chief financial officer, told Tribune Business that the BISX-listed port owner/operator has no plans to adjust projections for the year to end-June 2022 yet despite enjoying a 48.2 percent year-over-year total comprehensive income rise for the three months to end-September 2021.

He revealed that APD’s core business, twenty-foot equivalent unit (TEU) container volumes, were up 9 percent on prior year figures for the 2022 first quarter while vehicle imports were also ahead by 11 percent. However, when compared to pre-COVID volumes, these two segments remain down by 5 percent and 35 percent respectively.

Speaking after APD saw its total comprehensive income rise by more than $650,000 for the three months to end-September 2021, jumping from $1.402m to $2.078m, Mr Bethell said the improving financial performance means “there are no plans for any rate increase in the near term by APD”.

The Memorandum of Understanding (MoU) between the shipping industry and the Government, which led to APD’s creation in 2011, specifies that tariffs and fees can be adjusted to ensure the company generates an internal rate of return (IRR) of no less than 10 percent. 

But, with any rate increase ruled out in the near future, Mr Bethell said APD also has no plans to alter its 2022 financial year forecasts despite the improved year-over-year results as the company is currently matching projections with TEU volumes just 63 containers ahead of estimates.

“At this time we’re hitting our budget, so there’s no intention at this time to make any revisions, but we will monitor it,” he added. “When we forecast, we assumed throughout the first and second quarters [of 2022] we’d be above COVID volumes and for the third quarter, which would be the first calendar quarter in 2022, we would have been trending towards pre-COVID volumes.

“Moving into the third and fourth quarter, that’s what we’re focused on and that’s where we’re trending. We have seen there’s a shift in a more positive direction for the economy notwithstanding we’re moving into the season with increased holiday volumes. That is certainly coming in with the carriers; not excessive, but Christmas volumes are coming in.”

With perishable and non-perishable import volumes also matching expectations, and headed towards pre-COVID volumes, Mr Bethell continued: “Vehicles are trending about 11 percent over last year through to the end of the first quarter. Our TEUs are trending about 9 percent over last year for the first quarter.

“We’re still down about 5 percent on pre-COVID volumes on TEUs, and down about 35 percent on pre-COVID vehicle volumes. When you look through to the end of October, we are flat or relatively flat. TEUs are over budget by 63. On vehicles, we’re about 7 percent over budget through to the end of October.

“Our overall revenues are about 5 percent over budget through to the end of October and we continue to manage our costs. There are some bit ticket items that have not materialised, but we are trending slightly under budget on expenses.”

APD’s total operating income for the first quarter jumped by more than $1m or 31.2 percent, hitting $4.383m compared to $3.34m the year before. Finance costs also fell by over $100,000, dropping from $441,953 to $320,563 year-over-year due to the replacement of more than $30m in preference shares with lower-cost bank loans.

“What we are beginning to see when we look at the savings to the bottom line is the impact of the debt restructuring, moving from preference shares to bank debt. If you were to compare to the end of October to last year, we’re seeing the significant year-over-year savings when compared to previous finance costs,” Mr Bethell said.

He added that APD was anticipating a further boost from construction projects such as the FXPro property in western New Providence; Aristo Development’s Aqualina project at Cable Beach; and possibly Royal Caribbean’s Royal Beach Club on Paradise Island. This is in addition to existing projects such as the US Embassy, GoldWynn and Sterling’s Hurricane Hole development.

Revealing that APD has a capital budget “just shy of $2m” for this current financial year, Mr Bethell said it was awaiting arrival of equipment that will help its cranes to unload vessels at the Arawak Cay port more efficiently. Delivery has been delayed due to the supply chain backlog created by the COVID-19 pandemic.

Other upgrades include the planned replacement of golf carts and other vehicles used to move around APD’s docks, plus repairs to drainage. Energy efficiency at its Gladstone Road break-bulk terminal is also being targeted through the installation of LED lighting.