The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port’s operator yesterday said its 2020 profits could beat the prior year by as much as 10-20 percent following a stronger-than-anticipated first half.

Dion Bethell, Arawak Port Development Company’s (APD) president and chief financial officer, told Tribune Business that multi-million development projects and Hurricane Dorian were the “two main drivers” that produced a 34.7 percent year-over-year net income increase for the six months to end-December 2019.

He revealed that shipping container volumes for that period were running 9 percent ahead of APD’s own internal forecasts, while vehicle and bulk tonnage imports had beaten the company’s estimates by 13 percent and 23 percent, respectively, for the first half of a financial year that closes at end-June 2020.

Agreeing that APD’s performance signals the Bahamian economy is maintaining positive growth momentum outside the Dorian-hit islands, Mr Bethell said its focus remains obtaining “a formal lease” from the Government for 15 acres of land adjacent to the southern boundary of its existing property.

Reaffirming that the deal has already received “approval in principle” from the Minnis administration, he added that the BISX-listed operator of New Providence’s main commercial shipping gateway was eager to proceed with the planned $4m to $6m investment that will further enhance APD’s value to the Government, importers and consumers.

Mr Bethell said APD still intends to construct a facility for Customs to conduct enhanced shipping container inspections, thereby cracking down on smuggling and the importation of illegal goods - an effort that will stem revenue leakages, prevent crime and boost national security.

The other asset planned for those 15 acres remains a “one-stop-shop” for the Road Traffic Department where imported vehicles can be licensed and inspected, and the relevant insurance purchased from brokers who will also maintain a presence in the building.

However, Mr Bethell conceded that APD’s previously-planned liquefied natural gas (LNG) joint venture with New Fortress Energy was “very much on the backburner” and was not something the port operator “will continue to support at this time”.

The duo had explored constructing an LNG regasification terminal at Arawak Cay, which would then be used as a “bunkering” facility to supply the cruise ships in Nassau Harbour as that industry’s vessels increasingly convert to this fuel.

Mr Bethell, though, suggested that Bahamas Power & Light’s (BPL) selection of Shell North America to develop the multi-fuel power plant at Clifton Pier had thwarted the APD/New Fortress plans since it meant they had lost the opportunity to supply LNG to the state-owned power provider.

Still, APD’s core business continues to perform far strongly than even it had projected. Having originally forecast that full-year 2020 profits will be down by 9.5 percent year-over-year, Mr Bethell confirmed that these estimates have been reassessed following the half-year results.

“We’re absolutely ahead of Budget,” Mr Bethell told Tribune Business. “We have increased volumes on the containerised side, our twenty-foot equivalent unit (TEU) side, where they were up 9 percent ahead of budget through to the end of December.

“Vehicle imports were up about 13 percent over budget, and the bulk tonnage was up about 23 percent.” APD’s own statistics suggest the import growth momentum was maintained through early 2020, with January’s TEU throughput up 15.3 percent year-over-year at 5,252 compared to 4,557 last year.

Mr Bethell said ongoing major resort and residential development projects, especially those in New Providence, were a key driver of the increased TEU and bulk import volumes. He identified Sterling Global Financial’s Hurricane Hole project on Paradise Island; the GoldWynn development opposite the Prime Minister’s Office at Cable Beach; and Albany as some of the major contributors.

Aggregate and other materials imported for Lynden Pindling International Airport’s (LPIA) recent runway resurfacing had also helped, the APD chief added, while The Pointe had now moved to a furniture, finishings and equipment (FF&E) fit-out stage that was being reflected in its imports.

Bahamas Food Services’ expansion of its existing Gladstone Road facilities had also boosted bulk imports, said Mr Bethell, who added: “Then, of course, we’re starting to see the US Embassy’s volumes coming in. They have work starting, and that increase is because of the concrete required for that project.

“These projects’ volumes are over and above what we anticipated for the budget, and over and above what we did last year, which is contributing to this increase.” Increased import demand associated with Hurricane Dorian’s restoration and recovery was another growth factor that could not have been anticipated, he said.

APD’s near $1.4m year-over-year increase in first half net income was greater than the 23 percent margin by which the company beat its 2020 first quarter projections, and Mr Bethell confirmed that it will now “reforecast” for the remainder of the year to produce targets he is confident it can beat.

“We’ll probably be ahead 10 percent, even 20 percent over, what we’ve done last year,” Mr Bethell told Tribune Business of the revised profit expectations for the 2020 full year. “I think we would certainly be over what we did last year. I think we’ll beat last year year-over-year.”

APD saw growth in all key revenue streams compared to the 2019 first half, with landing fees, terminal handling fees, gate fees and storage fees all comfortably up on prior year comparatives. As a result, total revenues were up by 11.9 percent at $17.314m, while total expenses grew by a much smaller 5.4 percent margin.

As a result, APD’s earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 20.6 percent to $7.294m - a jump of more than $1.3m.

Mr Bethell, meanwhile, said the port operator remained focused on formalising the 15-acre lease that will facilitate its expansion. “Once we get this formalised we will put up a Customs Freight Station that will enable Bahamas Customs to do some on-site inspections where the need arises.

“Then there is the one-stop shop for the inspection of vehicles. Allowing us to have Road Traffic in that facility with insurance brokers will ensure that when importers bring their vehicles in they can get them licensed, inspected and insured before they leave APD’s property.”

Mr Bethell said APD would “continue to pursue other avenues” to increase and diversify its income streams, as achieving this would enable it to reduce port tariffs and - in so doing - the cost of living for Bahamian consumers.

However, he confirmed that this was unlikely to involve the previously-announced LNG tie-up with New Fortress. “That seems to be very well on the backburner,” Mr Bethell told Tribune Business, “and I don’t foresee any progress in that area.

“That is one of those things we were hoping would better assist us in keeping tariffs down, as it was complementary to our business, but that does not seem like something we will continue to pursue at this time.

“The whole idea was to facilitate the transfer of LNG from the shore line to BPL, but Shell won the bid to do that and would transfer from Clifton.”

Mr Bethell said APD, which directly employs just shy of 100 persons, planned to partner with the Ministry of Labour and private sector on the Inter-American Development Bank-financed apprenticeship programme as it seeks to “identify young, bright Bahamians that wish to operate in this maritime space”.

He added that 500 persons operated on a daily basis from APD’s facilities when shipping and trucking company employees, stevedores, Customs and Immigration were added to the port operator’s workforce total.