Kingston Wharves loses business but grows bottom line at half-year
Kingston Wharves Limited cited a fall in revenue from terminal operations and loss of business from a main shipping line as contributory factors to the 22 per cent contraction of operating profit at half-year.
Group revenue for the six months ending June 2014 also declined by $229 million to $1.78 billion.
The main business, Kingston Wharves, contributed $1.53 billion to revenue, but this was down by $139.37 million, or eight per cent year-on-year.
Operating profit decreased from $704 million to $545 million.
Net profit attributable to shareholders was $354 million compared to $322 million at half-year June 2013, with some of the improvement reflecting a lower tax charge for the period. Earnings per share was approximately 25 cents, up 2.2 cents.
decline in economic conditions
"The decline in revenue and operating profit for the six months was significantly influenced by the loss of business from a main shipping line and the overall decline in economic conditions," said the report over the signature of Chairman and Chief Executive Officer Grantley Stephenson.
However, it said revenues generated from the acquisition of a new stevedoring business in February 2014 along with various cost-reduction initiatives have reduced the impact of the losses from the container business.
Operating profit for subsidiary Harbour Cold Stores Limited improved by three per cent.
The report said the board's decision to restructure Harbour Cold Stores in the third quarter of 2013, which saw the cold storage segment being leased to a third party and the refrigeration segment being managed by Kingston Wharves, has resulted in greater operational synergies and improved profitability.
Revenue for another subsidiary, Security Administrators Limited, for the six months declined by nine per cent, while operating profit fell sevenfold from $24 million to $3.39 million.
The decline mainly resulted from the discontinuation in May 2013 of the subsidiary's container sealing operation, which contributed $22.2 million to its performance at HY2013.
The report said that domestic demand is expected to remain flat in the short to medium term and hence Kingston Wharves will continue to pursue an aggressive growth strategy which involves expansion of the trans-shipment and logistics business.
It said the benefits of being designated a free zone in support of the company's port expansion programme have begun to materialise with the purchase and design of a new facility to relocate its Berth 7 warehouse.