The Tribune

* Net income to fall $1.434m in 2021

* Based on 12% revenues drop-off

* TEU imports set for 10,000 plunge

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

New Providence's major commercial shipping port is projecting a near-20 percent year-over-year profit decline for its current financial year as COVID-19 depresses demand for cargo imports.

Arawak Port Development Company (APD), in its just-released annual report for the 2020 financial year, revealed that it is forecasting net income will be down by $1.434m for the 12 months due to close on June 30 next year.

The BISX-listed Nassau Container Port operator said it was basing these predictions on a 12 percent, or $3.6m-plus, fall in annual revenues due to a drop in cargo volumes with the number of twenty-foot equivalent unit (TEU) containers passing across its wharves and bulkheads set to fall by 10,000 year-over-year.

"For the 2021 fiscal year we are budgeting gross revenue of $27.525m (2020 was $31.16m) or 12 percent less than the prior year's actual gross revenue," APD said. "Net income is projected to be approximately $5.796m or approximately $1.434m less than the 2020 actual net income of $7.23m.

"The decline in revenues, net income and volumes are solely attributable to the negative impact of COVID-19, on our local economy, especially our tourism sector. Our net income is currently 3 percent or $29,321 under budget as at August 31, 2020."

While resort and real estate-related investments such as Baha Mar's water-based theme park; Sterling Global Financial's Hurricane Hole redevelopment; The Pointe; the Nassau Cruise Port; Albany West; and GoldWynn's condo hotel and residences are either under construction or in the pipeline, APD said its cargo volume forecasts were cautious.

"Management remains extremely conservative and does not foresee any significant project volumes during financial year 2021," APD said. "As a result of COVID-19 volumes have been down by as much as 25 percent since March/April 2020. We foresee that volumes will remain down until at least the first quarter of 2021.

"Total market volumes have decreased as a result of COVID-19 and are estimated to be around 123,000 TEUs for 2021 or 10,000 under the 2020 budgeted volumes of 133,000 TEUs. Our total revenues as at August 31, 2020, are under budget by approximately $52,000 or 1 percent. Total expenses as at August 31, 2020, were under budget by $142,220."

However, there was better news for APD when it came to cargo volumes, as these were 2 percent ahead of forecast for the first two months of its 2021 financial year through to end-August.

Turning to the performance for its 2020 financial year, APD added that it had "processed 129,694 inbound/outbound TEUs.This represents a 1.55 percent decline in container volumes under 2019 volumes of 131,734 TEUs".

It continued: "In the 2020 financial year, APD exceeded budgeted net income projections. Budgeted net income was $7.121m, while actual net income for 2020 was $7.23m, which is $108,409 or 2 percent more than budget. The company’s total revenues for 2020 were $31.16m, which is $247,333 or 0.8 percent higher than the prior year.

"Net income for 2020 totaled $7.23m or 10 percent lower than the prior year. Net income and revenues would have been higher had it not been for the concessions that APD gave on all imports from March 23, 2020, to April 22, 2020, to provide relief for all imported cargo into New Providence at the onset of the COVID-19 pandemic.

"Our direct operating margin (DOM) for 2020 was 50 percent. Our budgeted DOM for 2020 was 42 percent. For the period ended August 31, 2020, our DOM is 41 percent which is 2 percent more than our budgeted DOM for the same period."

Dion Bethell, APD's president and chief financial officer, told shareholders that the concessions provided to shipping carriers at the height of the COVID-19 lockdown and restrictions in March-April 2020 amounted to some $1.043m in foregone revenues.

"APD delivered a comprehensive 30-day package of emergency assistance relating to warehousing, manpower and fee concessions encompassing security, landing, stevedoring, terminal handling/throughput, hazmat, dockage, line handling, gates and reefers," he wrote in the annual report.

"Some specifics included the reduction of Port fees by 50 percent and waiving tenant rents/leases at the Gladstone Freight Terminal for 30 days from March 23 to April 22. The company also extended for a further 14-day period free storage time for loaded containers and vehicles, an initiative aimed at helping to reduce the strain from the coronavirus pandemic on the Bahamian purse.

"With the cooperation of other businesses and entities along the supply chain, the monetary reductions were intended to work to bring much needed economic relief in this time of challenge. The programme came at a cost to the company’s revenues, as did the effort to maintain employment levels and the concessions to carriers. Few can honestly refute that APD stood in the gap to prevent a harmful chain reaction that could have seriously impinged on national survival."