KW reports 14% decline in year end net profit attributable to shareholders

March 2, 2021

Kingston Wharves Limited (KW) for the year ended December 31, 2020 reported total revenue of $7.14 billion, a 10% decrease relative to the $7.90 billion recorded for the corresponding period in 2019. Revenue for the quarter amounted to $2.03 billion, a 7% contraction relative to the $2.18 billion recorded for the same period in 2019.

The ‘Terminal Operations’ which accounted for 69% of total revenues, fell 14% year over year to a total of $4.96 billion relative to $5.75 billion last year. According to KW, “The Kingston Wharves terminal continues to handle a wide range of cargo types serving the domestic and transshipment markets. The volume of cargo handled during the year was reduced as a result of the COVID-19 pandemic.”

The company’s ‘Logistics & Ancillary Services’ grew 2%, to total $2.18 billion, up from $2.14 billion booked twelve months earlier. The company highlighted that, “The Logistics Services Division has emerged as a resilient profit centre within KWL, while offering agile logistics solutions and providing useful alternatives to both commercial and personal effects clients. The division’s modern warehousing, digital and systems capabilities also allowed KWL to maintain solid service levels notwithstanding the stringent health and safety requirem ents associated with the pandemic.”

Cost of sales fell 1% to a total of $3.80 billion (2019: $3.85 billion).  As such, gross profit fell by 17% for the period to total $3.34 billion relative to $4.04 billion recorded a year ago. Gross profit within the fourth quarter also fell 17% to close at $919.20 million compared to $1.11 billion booked for the quarter ended December 31, 2019.

Other operating income for the period rose year over year to total $580.50 million (2019: $262.02 million). Administrative expenses for the year contracted by 11%, amounting to $1.07 billion from the $1.20 billion recorded for the same period last year.

As such operating profit closed the year end at $2.85 billion, a 8% decrease relative to the $3.10 billion recorded for the comparable period in 2019. For the quarter, operating profit amounted to $819.49 million (2019: $787.41 million).

No gain on acquisition of subsidiary and gain on disposal of interest in joint venture were booked for the period under review relative to the prior year where they ended at $16.12 million and $22.16 million, respectively. Finance cost closed the period at $154.88 million (2019: $177.92 million).

Profit before taxation closed the year at $2.70 billion, a 9% decline year over year (2019: $2.96 billion).

Income tax expense for the period amounted to $421.99 million for the year end, a 29% increase relative to the $326.14 million incurred for same period last year. Consequently, net profit for the period moved from $2.64 billion in 2019 to $2.28 billion in 2020, a 14% decline year over year.

Total comprehensive income for the year end closed at $6.80 billion (2019: $2.64 billion). In addition, net profit attributable to shareholders declined by 14% to total $2.24 billion relative to $2.60 billion recorded for the corresponding period in 2019. Net profits attributable to shareholders for the quarter amounted to $643.43 million, a 17% decline relative to the $772.42 million recorded for the same quarter of 2019.

Consequently, earnings per share for the year ended December 31, 2020 amounted to $1.56 (2019: $1.82), while earnings per share for the quarter amounted $0.45 relative to the $0.54 recorded for same quarter in 2019. The total number of shares used in the calculations amounted to 1,430,199,578 units.  Notably, KW’s stock price closed the trading period on March 1, 2021 at a price of $46.19 with a corresponding P/E ratio of 29.52 times.

Notably, KW stated, “We will be enhancing our investment in robust security technology, policies and system s in 2021. In this period of relative economic uncertainty, we will prioritize our investment in security as a way of reducing the range of risk factors facing our clients.”

Balance Sheet Highlights:

As at December 31, 2020, the Company’s assets totaled $38.23 billion relative to $32.58 billion a year ago, an increase of 17%, which was driven mainly by an increase in ‘Property, plant and equipment’ and ‘Short term investments’ which increased 22% and 25% respectively to total $27.24 billion (2019: $22.29 billion) and $6.56 billion (2019: $5.23 billion) respectively.

Shareholders’ Equity amounted to $32.58 billion compared to equity of $26.59 billion reported as at December 31, 2019.  As such, KW has a book value per share of $22.78 (2019: $18.59).



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