November 11, 2020
Kingston Wharves Limited (KW)
Unaudited Financial Statements for the Nine Months Ended September 30, 2020:
For the nine months ended September 30, 2020, Kingston Wharves’ revenue totaled $5.11 billion an 11% decrease when compared to $5.72 billion for the corresponding period of the prior year, while revenue for the third quarter fell 9% to $1.75 billion (2019: $1.92 billion). This is as a result of both the company’s ‘Terminal Operations’ and ‘Logistics & Ancillary Service’ segments reported decreases.
The Terminal Operations division generated operating revenue of $4.04 billion for the nine-month period, representing a decrease of 11% over the corresponding period of the prior year. Divisional profits stood at $1.49 billion, declining by 18% year-on-year, from the $1.82 billion achieved in 2019. According to KW, “The Division remains a key profit centre for the company, despite the dip in revenues and profits precipitated by the global falloff in shipping volumes, due to the COVID‐19 pandemic.”
The company’s Logistics Services Division generated revenues of $1.49 billion, a decrease of 1% over the prior year. Divisional profits increased by 9% relative to 2019, moving from $499 million in 2019 to $543 million. The company identified this division as a growth area and highlighted that “The relatively strong performance in this division is a reason for optimism. In particular, we have been able to support importers and exporters who have had to rapidly adapt their sourcing and shipping arrangements as a result of the pandemic and have been able to rely on our services to handle the movement of goods through these alternative maritime channels.”
Cost of sales declined 4% to a total of $2.69 billion (2019: $2.78 billion). As such, gross profit fell by 18% for the period to total $2.42 billion relative to $2.94 billion recorded a year ago. Gross profit within the third quarter fell 13% to close at $856.70 million compared to $980.34 million booked for the quarter ended September 30, 2019.
Other operating income soared year over year, to total $462.96 million (2019: $294.81 million). Administrative expenses went down by 7%, amounting to $850.25 million relative to $917.03 million for the same period last year.
As such, operating profit closed the period at $2.03 billion, 12% less than the prior year’s total of $2.32 billion. Likewise, operating profit for the quarter fell by 11% to $721.29 million versus $811.83 million in 2019.
Finance costs for the period declined 18%, to close at $111.89 million relative to $137.09 million booked for the corresponding period in 2019.
Profit before taxation fell 12% to $1.92 billion for the period in contrast to the $2.18 billion in 2019.
Income tax expense for the period fell 8% to $296.78 million compared to $323.19 million for the corresponding period in 2019. Net profit for the period moved from $1.86 billion to $1.62 million, a 12% decline year over year. While for the quarter net profit closed at $562.16 million (2019: $657.23 million).
Net profits attributable to shareholders for the nine months fell by approximately 13% to total $1.59 billion relative to $1.83 billion in 2019. Consequently, third quarter profit attributable to shareholders fell 15% to close at $550.43 million. (2019: $646.78 million).
Earnings per share for the nine months ended September 30, 2020 amounted to $1.11 (2019: $1.28), while for the quarter, the EPS was $0.38 (2019: $0.45). The trailing earnings per share EPS totaled $1.65. The total number of shares used in the calculations amounted to 1,430,199,578 units. KW closed the trading period on November 11, 2020 at a price of $48.75.
Management indicated, “KWL have begun to see positive signs of a recovery in the two main operational segments of our business. A key signal is the fact that third quarter performance has demonstrated growth over the previous quarter, which was noticeably affected by the trade slowdown precipitated by the pandemic.”
In addition, the Company also noted, “Setting our sights beyond the COVID‐19 pandemic, we remain in a cautious but determined expansion mode, characterized by then pursuit of opportunities for vertical integration, product and service diversification and investment in our workforce, logistics centred infrastructure and business processes enabled through digital technology.”
Balance Sheet Highlights:
As at September 30, 2020, the company’s assets totaled $32.95 billion relative to $32.85 billion a year ago, a marginal increase of 0.30%, which was driven mainly by an increase in ‘Retirement Benefit Assets’ and ‘Short-term investments’ which increased 4% and 14% respectively to total $2.07 billion (2019: $1.99 billion) and $5.73 billion (2019: $5.02 billion) respectively. Notably the company also booked $211.63 million for ‘Rights of use asset’ relative to $951.57 million the prior year.
Shareholders’ Equity amounted to $27.82 billion compared to equity of $26.19 billion reported as at September 30, 2019. As such, KW has a book value per share of $19.45 (2019: $18.31).
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