Introduction
After greeting and welcoming shareholders and visitors, Jeffery Hall, Chairman of Kingston Wharves Limited (KW) stated, “the performance of your business in 2016 was satisfactory and strong.” He highlighted that Kingston Wharves is an important service provider to businesses and people of the wider Caribbean. The Chairman went on to state his view that, “our business does well when the region grows in line with its potential. We are committed to deploying your $23.5 billion of assets in a manner which allows us to contribute, sustainably to the region’s economic success. In light of this, our immediate focus is and has been to improve our business prospects, through investments which strengthens our unique capabilities to handle a full range of automotive cargo, break bulk cargo, bulk cargo and containerized cargo.”
Throughout the year Kingston Wharves has sought to improve the overall efficiency of its operations while providing logistics and warehousing services to the Caribbean region’s major importers and exporters, while expanding the number of ports that receive a direct call in the network of shipping lines that use Kingston Wharves. The emphasis on economic growth and infrastructure development in Jamaica, and the designation of Kingston Wharves as a free zone and special economic zone will all improve the prospects for executing this strategy. Mr. Hall stated that, “our customers tell us that these factors, together with proposed initiatives to make it easier to do business in Jamaica and to rationalize, streamline and automate their relations with Jamaica Customs and the wider port community, are extremely important to making our terminal and logistics center even more attractive and competitive. We will continue to advocate for these developments and where possible, play a leadership role in spearheading them for the benefit of all stakeholders.” Following the Chairman’s remarks, the meeting was handed over to Chief Executive Officer (CEO), Mr. Grantley Stephenson, for a brief presentation on the company’s performance in 2016.
Mr. Stephenson welcomed shareholders not just to the meeting but to the new total logistics facility. The CEO noted, “this time last year, this was still on paper.” The Total Logistics facility is 160,000 square foot state of the art integrated cargo warehousing, processing, logistics and distribution center designed to transform the ease of importing and exporting commercial cargo and personal effects. Upon its completion in 2017, this facility will be the single largest warehouse operating within the boundaries of the Jamaican port system and special economic zones. In addition to the construction of the Total Logistics Facility, KW enlarged their footprint within the immediate environment of the Newport West area via acquisition of existing warehouse structures and vacant lots. The CEO also highlighted the, “Rehabilitation of the container storage yard with the new Rigid Pavement design was a cost reduction initiative which commenced in 2014 and continued in 2016. We also made a leap in the use of technology in preventative maintenance management with the introduction of a system tailor-made for KWL. This software is crucial in ensuring that maintenance activities and the associated costs for existing, upgraded and new facilities are properly and efficiently managed.”
Key Financial Performance for FY2016:
- Revenue for the financial year increased 16% to $5.41 billion compared to $4.67 billion in 2015. This resulted from a 16% increase in revenue from the terminal operations and a 15% growth in logistics and ancillary services. Following cost of sales of $2.90 billion (2015: $2.53 billion), gross profit for the year rose 17% to $2.51 billion (2015: $2.15 billion).
- Operating profit for the year amounted to $1.68 billion relative to $1.57 billion in 2015, a 7% improvement year over year.
- Profit before Tax increased by 6% from $1.41 billion to $1.49 billion. There was a tax charge of $176.06 million in 2016 relative to $141.88 million recorded for the prior year.
- As a result, Net Profit for the year was reported at $1.31 billion, an increase of 4% on the previous year’s total of $1.27 billion.
- EPS for the year totaled $0.90 relative to $0.88 for the 2015 financial year.
Additionally, the terminal operations of the company were positively impacted by the increased performance of both the container and motor vehicle handling units. This as a 10% increase in motor units and 4% growth in containers handled were the main contributors to the increase. Transhipment volumes according to the CEO continue to outpace domestic volumes, in both motor units and containers handled. In 2016, KW reported 137,720 transhipment containers were relative to 93,251 for domestic volumes. In the motor units moved, domestic units handled amounted to 31,230 units while transhipment totalled 34,637 units.
Outlook for 2017:
In 2017, KW will continue to maintain its leadership position in the country, Caribbean and Latin America according to Mr. Stephenson. The CEO noted, “we have been profoundly changing our business. We have reshaped the portfolio from a broad conglomerate to a more focused infrastructure terminal operations and logistics services. We took important steps in that pivot last year and we invested heavily in enterprise capability in 2016. If 2015 was the year to stay the ship, 2016 was the year to set sail. We have crafted initiatives to ensure that the KW container terminal is equipped in every respect to efficiently serve new and existing core customers and to leverage its capabilities to meet domestic and transhipment requirements. We will seek new possibilities to make Kingston Wharves the best logistics terminal in the Caribbean and the leading automotive terminal in the Region. We have a plan that is both competitive and sustainable.”
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