Port and logistics company Kingston Wharves has been burnt severely by the appreciation of the Jamaican dollar in 2022, resulting in huge foreign exchange (FX) losses.
The situation is so severe that it caused a big adverse swing of J$609 million in FX losses year-on-year. The appreciation of the Jamaican dollar relative to the US dollar in 2022, led to an exchange loss of J$177 million for the financial year ended December 31, 2022, when the company had recorded an FX gain of $432 million in 2021.
Kingston Wharves holds a strong cash position that is denominated primarily in US dollars, given that its cash holdings broadly align with the currency in which costs associated with long-term capital investment plans are denominated. In general, over the years, the port and logistics operator books a foreign exchange gain in connection with these holdings.
The audited group results for 2022 show Kingston Wharves increasing revenues by nine per cent to J$9.5 billion. However, net profits attributable to shareholders went down 16 per cent or J$502 million, moving from J$3.2 billion at the end of 2021 to J$2.7 billion at the end of 2022.
Earnings per stock unit dropped to J$1.89 from J$2.24 in 2021. Excluding foreign exchange gains or losses, net profit before taxes increased by 1.6 per cent relative to the prior year. The company declared dividends during the year of J$958 million. The dividend per stock unit of J$0.67 in 2022, which was 12 per cent higher than the dividend per stock unit in 2021.
The annual operating revenue for Kingston Wharves’ terminal operations division amounted to J$7.6 billion, a year-on-year increase of 12 per cent. Operating profit before foreign exchange (FX) loss for the terminal operations was J$2.5 billion or 13 per cent above the prior year.
The terminals division continues to make a significant contribution to Kingston Wharves’ results, accounting for over 70 per cent of revenues and profits. The division handled increased volumes of a number of cargo types in 2022 and experienced a particularly strong year in its transhipment business.
The logistics services division contributed J$3.0 billion in revenue compared to prior year’s revenue of J$2.8 billion, an increase of seven per cent. This division accounted for 28 per cent of revenue for 2022. Operating profit before FX loss of J$848 million for the logistics services division was down 22 per cent relative to 2021.
The reduction in divisional operating profits was partly impacted by a charge of J$85 million associated with the demolition of a building to increase port storage capacity and operating flexibility. The Division also experienced inflationary increases in operating costs, and a reallocation of administrative expenses, which were previously accounted for in the terminal segment.
Jeffery Hall, Kingston Wharves chairman, remarks that: “KW Logistics has positioned itself to lead on the full suite of logistics services. Our agile warehousing and logistics solutions enable us to deliver customized services to manufacturers, retailers and distributors across a range of industries, providing order fulfilment, order picking and packing, warehousing, inventory management, freight transportation and distribution, among other services, all within a Special Economic Zone.”
He reiterated the management’s commitment to continuing to make capital investments to improve the functionality of our logistics space and the efficiency of our services.