Westports posts higher Q3 net profit as container volume rises

Westports CEO Ruben Emir Gnanalingam said the container shipping industry has just gone through an unprecedented recalibration and realignment processes which affected almost all major liners.

KUALA LUMPUR: Westports Holdings Bhd posted higher net profit of RM142.32mil in the third quarter ended Sept 30, 2018 (Q3 FY18) compared with the preceding quarter due to higher gross profit and lower finance cost.

It announced on Friday net profit rose by 17% from RM121.81mil in Q2 ended June 30, 2018 also due to higher pre-tax profit, revenue and as transhipment volumes recovered after five consecutive quarters of declines.

Westports' profit before tax increased by 13% to RM182.16mil from RM161.60mil mainly due to higher gross profit and lower finance cost for saving of commitment fee as cancelation of revolving credit facility from Bank of China and income earned from investment funds for Q3 FY8 compared to Q2 FY18,” it said.

Operational revenue rose by 6% to RM417.55mil in Q3 FY18 from RM394.03mil mainly due to growth in total container volume by 9%. 

“Overall container volume increased strongly by 14% over the previous corresponding period. Gateway volume’s momentum improved further from the previous quarter as it increased by 19% while transhipment improved by 12%,” it said.

Westports group managing director Datuk Ruben Emir Gnanalingam stated: “The company’s transhipment volume was adversely affected in the previous year, especially by the formation of new global alliances and mergers and acquisitions among the container shipping lines. 

“During Q3 FY18, after five consecutive quarters of declines, Westports has successfully and fully transitioned towards the new baseline as transhipment volume registered an improvement of 12% over the previous corresponding period.” 

“Gateway container volume remained strong by registering an overall 9-month growth of 20% as domestic economic growth remained favourable. The Intra-Asia segment showed sustained momentum with growth of 12%, increasing the trade lane’s contribution to Westports overall volume to 61%. 

“The favourable volume momentum during Q3 FY18 has finally nudged Westports overall container volume’s standing into a growth of 2% over the previous corresponding period as the company handled a total throughput of 6.95 million TEUs. The latter’s single-digit growth rate is in-line with the volume guidance provided by the company since the beginning of the year”. 

Q3 FY18 vs Q3 FY17 

Westports's net profit, when compared with a year ago, fell by 5.6% to RM142.32mil in Q3 FY18 from RM150.82mil a year ago due to claim of investment tax allowance (ITA) a year ago.

However, profit before tax rose 2% to RM182.16mil from RM178mil a year ago due to higher gross profit. 

Westports' revenue fell by 15.1% to RM417.55mil from RM492.27mil mainly due to the adoption of Malaysian Financial Reporting Standards 15 (MFRS 15) . Earnings per share were 4.17 sen compared with 4.42 sen.

The total container volume increased strongly by 14% during the 3rd Quarter of 2018 over the previous corresponding period as strong domestic economic activities spurred gateway volume’s momentum further as it increased by 19%. 

Transhipment volume also posted the first quarterly increase after five consecutive quarters of declines as containers handled in this category increased by 12% to 1.58 million TEUs. 

9M FY18 vs 9M FY17 

For the nine months ended Sept 30, 2018, its net profit fell by 12% to RM387.93mil from RM440.53mil in the previous corresponding period after making provision for the normal corporate statutory tax rate, higher depreciation charges and finance costs arising from the recently completed Container Terminal 8 (CT 8) and CT9 container terminal expansion in 2017, and higher manpower expenses due to an increased in the number of employees working at Westports.

Westports' profit before tax fell by 5% to RM507.37mil from RM531.45mil mainly due to higher depreciation and finance cost. Its revenue declined by 21% to RM1.19bil from RM1.51bil mainly due to the adoption of MFRS 15 from Jan 1, 2018. 

Westports said CT 8 and CT 9 which had been completed last year are being actively utilised, and the latest wharves regularly accommodate the ultra-large container vessels, of almost 21,000-TEUs, that call at Westports. 

“Westports is planning for a significant expansion in its container terminal facilities after securing the approval-in-principle from the government last year. 

“The company has successfully bid for and is now making instalment payments for the 154-hectare land adjacent to CT9,” it said. 

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