The Tribune

• Bottom line to end-March beats goal by $626,000
• Despite TEU containers, aggregate volumes off
• Cost control minimises revenue reduction impact

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau’s main commercial shipping port yesterday said “the worst of the disruption” from COVID inflation and supply chain shocks is over with its $8.5m profit at end-March almost 8 percent ahead of target.

Dion Bethell, Arawak Port Development Company’s (APD) president and chief financial officer, told Tribune Business in a series of written answers that net income for the first nine months of its 2024 financial year was some $626,000 ahead of expectations despite container and bulk aggregate volumes coming in below forecast for the period.

Voicing optimism that the BISX-listed port operator will nevertheless hit its financial goals for the year to end-June, he added that cost management and “favourable interest rates” on the company’s $25m current and long-term bank debt had compensated for reduced activity in two key import categories.

And, while the threat posed by post-pandemic inflation and supply chain bottlenecks has not entirely eased, Mr Bethell told this newspaper that both factors were “stabilising and trending positively” based on the recovery in import volumes, consistent revenue streams and a focus on expenses control and containment.

“Twenty-foot equivalent unit (TEU) volumes, although slightly behind budget and prior year figures, show a recovery trend when compared to the pre-COVID levels of 2019 and 2020,” he disclosed.

“Specifically, TEU volumes in the 2024 third quarter are up by 10.2 percent compared to fiscal year 2019 and 1.3 percent compared to fiscal year 2020. Similarly, vehicle volumes have substantially increased from pre-COVID levels, indicating a recovery in this segment as well.” The 2020 third quarter, covering the three months between January and end-March, were largely COVID-free.

Turning to APD’s top-line, Mr Bethell said: “Our revenues in the 2024 third quarter closely matched those of the same period in the previous year and exceeded the budgeted figures slightly by 1.1 percent. This stability in revenue, despite the volume fluctuations, suggests effective management to offset lower volumes.

“There’s been an increase in operational expenditures - slightly over the budget and previous year - which could reflect ongoing adjustments to inflationary pressures or increased costs due to supply chain inefficiencies. However, the fact that these are not excessively over budget or previous year figures indicates that cost increases are controlled and managed.

“While APD has not entirely passed all challenges related to inflation and post-COVID supply chain disruptions, the situation is stabilising and trending positively. The recovery in volumes back to or exceeding pre-COVID levels in certain segments, combined with stable revenues, indicates that the worst of the disruptions are behind, although cautious management remains crucial as global economic conditions continue to evolve.”

For the nine months to end-March 2024, APD’s total revenues finished some $1.3m down on the prior year comparative, dropping 4.8 percent to $26.202m based on unaudited figures as opposed to $27.516m. Total expenses, though, were well controlled and decreased by $310,000 or 2.4 percent to $12.862m compared to the prior year’s $13.173m.

This produced operating income, or earnings before interest, depreciation and amortisation (EBITDA), of $13.339m that represented a $1m or 7 percent decline on the prior year’s $14.344m. Lower finance costs and depreciation/amortisation helped to further narrow the bottom line gap, with this year’s $8.54m total comprehensive income some $800,000 or 9 percent down on the prior year’s $9.372m.

Still, Mr Bethell said APD’s performance looked better when set against budget targets and expectations for its 2024 financial year. “For the nine months ending with the 2024 third quarter, our net earnings were over-budget by 7.92 percent or approximately $626,000,” he explained. “Our EBITDA was 5.31 percent over-budget for the nine months ended with the 2024 third quarter.”

This was despite the drop-off in TEU container and bulk aggregate import volumes, with the latter off by double digits against expectations. “The TEU volumes for the nine months ending with the 2024 third quarter were 104,669 versus budgeted TEUs for the same period of 108,321, or 3.37 percent under-budget,” Mr Bethell told Tribune Business.

“The vehicle volumes for the nine months ending with the 2024 third quarter were 14,027 versus budgeted vehicle volumes for the same period of 13,500 or 3.9 percent over-budget. The bulk tonnage volumes for the nine months ending with the 2024 third quarter were 252,026 versus budgeted bulk tonnage volumes for the same period of 293,250, or 14.06 percent under-budget.”

The APD chief added: “Our overall results and expectations year-over-year are as expected given that we are over-budget, and despite us being down in TEU volumes and bulk tonnage volumes. For the full year 2024, we budgeted and expected a decline in storage fees - indirect volume-based revenue.

“For the nine months ended with the 2023 third quarter, our storage revenue was about $3.2m versus the 2024 third quarter of approximately $1.23m. Our overall net earnings [through] the 2024 third quarter were approximately $8.53m versus approximately $9.37m, and our net earnings was over-budget by 7.92 percent or approximately $626,000.

“This is also attributable to cost management and favourable interest rates on our long-term bank debt.... APD remains cautiously optimistic about meeting its financial projections for financial year 2024. Given the current trends, and assuming no drastic changes in market conditions, we are confident that as the economy continues to rebound we will trend towards our revenue, EBITDA and TEU volume targets.”

Mr Bethell added that APD will be keenly watching today’s Budget to get an indication of any upcoming government or public-private partnership (PPP) infrastructure and development projects for New Providence that further stimulate construction material-related import demand. “We are awaiting the 2024-2025 Budget for any new projects,” he confirmed.

“Construction remains strong with the US Embassy project coming to a completion. The Aqualina II project is underway, Royal Caribbean will begin soon [on Paradise Island], GoldWynn II is underway, possibility of a new hospital, ongoing roadworks. The shopping centre at Old Fort is underway ……. Construction is booming, including residential construction.”