Kingston Wharves invests $600m in equipment amid robust business
Kingston Wharves Limited (KWL) is buying new cranes and other equipment to handle increased business at the port.
Delivery and commissioning of the equipment is expected before year end.
Profits are up by 42 per cent so far this year, with the port company reporting gains in both its core business and developing business lines up to September 2015. Net profits attributable to shareholders grew from $528 million at the nine-month mark in of 2014 to $751.22 million in the current period, while group revenues expanded from $2.75 billion to $3.35 billion.
Revenues of $1.19 billion in the third quarter reflected an increase of $224.09 million or 23 per cent over 2014, according to the company’s financial report, from which Kingston Wharves carved profit of $324.26 million for the quarter, an increase of 86 per cent relative to the third quarter of 2014.
However, Kingston Wharves said the third quarter and year-to-date results included other operating income of $84 million associated with a non-recurring capital asset distribution of shares received by the group.
“Our year-to-date warehousing revenues outperformed 2014 by 38 per cent, arising, in part, from concentrated efforts at building and marketing KWL’s logistics service capacity,” said the interim report to shareholders, over the signature of chairman Jeffrey Hall.
He said the momentum in the logistics business segment has continued since the start of the year and is expected to increase as the company brings more than 160,000 square feet of purpose-built warehousing and manufacturing space on stream at the beginning of 2017. Transhipment and domestic container volumes at the KWL terminal increased by 13 per cent and 26 per cent respectively, while the number of motor units handled grew during the year by 19 per cent.
“In the context of change and competition in the local and international shipping and port services industry, these positive results reinforce the view that there continues to be opportunities for strategic investments in infrastructure, equipment and technology to position the group for sustainable growth,” said Hall.
Against that background, the company ordered a new mobile harbour crane and two container stackers in August to expand the pool of container handling equipment at the KWL terminal.
The equipment is being acquired at a cost of approximately $600 million and is expected to arrive in Kingston in this fourth quarter to support peak demand for equipment and berth utilisation.
Efforts at maximising efficiencies have contributed to the increase in gross profit margins over the period, with increases in administrative and operating expenses in line with increased business activity and inflation, the report said.
Group subsidiaries, Security Administrators Limited and Harbour Cold Stores contributed 14 per cent of overall revenue for the nine-month period, increasing by nine per cent from $380 million during the corresponding period of 2014 to $411 million, and supporting a corresponding 33 per cent increase in operating profits.
Taking into account the group’s performance so far this year, and the business indicators for the remaining months, KWL said it is expecting to close the year in a strong financial position.
“We are in the process of preparing KWL for the heightened competition in the region and are optimistic about the group’s performance in the year ahead, but recognise that our success will depend on our ability to remain focused on strengthening our capacity, growing our business and returning value to our shareholders,” the chairman said.