Profitability maintained because of wide range of revenue sources
Profits are down at Kingston Wharves Ltd for 2020, which was a challenging year for the business.
The company generated pre-tax profits of $2.70 billion, a reduction of nine per cent relative to 2019. Net profit attributable to shareholders for 2020 was $2.24 billion, a reduction of 14 per cent relative to the prior year.
Revenues were down 10 per cent to end the year at $7.1 billion for 2020, a decline of 10 per cent relative to 2019.
Despite the challenges and the declining profits and revenues, Kingston Wharves managed to maintain high service levels, ensure all aspects of legal and regulatory compliance and husband its resources while reducing costs.
Kingston Wharves Chairman Jeffrey Hall, in his forward message to shareholders in the company’s just published 2020 annual report, was quick to point out that “importantly, during 2020, our stockholders equity increased by 22.5 per cent. In line with our confidence in the business, and in its ability to recover after the pandemic, we held our dividend per stock unit of $0.54 in 2020 (representing total declared dividends of $772 million) equivalent to the dividend per-stock unit in 2019”.
Saved by wide range of revenue sources
Kingston Wharves benefitted from the fact that, within the scope of its port terminal and logistics operations, it has a wide range of revenue sources. This reflects the chosen business model of the company and is consistent with our strategic priorities for the future.
The business handles domestic cargo that is connected to Jamaica as either imports or exports. This is in addition to handling the trans-shipment of cargo where Kingston Wharves represents the most competitive location for regional and global lines to station cargo as it awaits transfer from one shipping service to another.
According to the Hall, “our terminal now provides sea freight connections to over 30 regional ports and connections for cargo to terminals as far away as New Zealand and Australia. We are committed to handling domestic and transshipment cargo for a range of shipping lines, and, as such, we are designated a multi-user terminal”.
For his part, Kingston Wharves Chief Executive Officer Mark Williams highlighted the importance of the mitigating strategies employed during the pandemic.
Williams reported that, “as a result of our mitigation strategies, Kingston Wharves achieved creditable results in revenues and profits in 2020. The company earned revenues of J$7.1 billion and before tax profits of $2.7 billion, a relatively strong performance, given the effects of the pandemic”.
He said the company accomplished growth in its logistics business over the period, driven by our strategic investments, acquisitions and onboarding of new strategic partnerships for 3PL logistics services.
Williams explained that 2020 was a critical time to invest in the business to innovate and expand; not an occasion to shrink back.
As such, the company made significant capital investments in 2020. These initiatives targeted infrastructure readiness, through plant optimisation, berth redevelopment, construction, land acquisition, digitalisation as well as in our people.
”We made capital investment of over $130 million to carry out dredging work covering all nine berths and berth face rehabilitation valued at some $176 million, all aimed at maximising our capacity to service auto liners, bulk, break-bulk and container vessels, the CEO reported. Pre-construction works related to redevelopment of Berth 7 to optimise the efficiency and servicing at that docking area also got under way in 2020, while the company completed the repairs and reconstruction activities on Berth 3.