KW reports 19.6% increase in year end net profits

Date: March 4, 2019

Kingston Wharves Limited (KW) for the year ended December 31, 2018 reported total revenue of $7.25 billion, a 13.9% or $884.33 million increase relative to the $6.37 billion recorded for the corresponding period in 2017. Of this the terminal operations segment booked revenues of $5.34 billion (2017: $4.92 billion), while Logistics and Ancillary Services accounted for $1.91 billion (2017: $1.45 billion). Revenue for the quarter amounted to $1.99 billion, an 8% increase relative to the $1.85 billion recorded for the same period in 2017.

According to KW, “Divisional operating profits increased by 20% over the prior year to $1.88 billion. This performance was driven by the growth in domestic containers handled and the continued expansion of our regional hub for motor vehicles. The Group continues to see growth prospects for this division as a market leading multi-purpose and multi-user terminal serving a full range of bulk, break bulk, liquid bulk, containerized, automotive and special project cargo types. Streamlined activities at the KWL Total Logistics Facility (TLF) and the KWL Global Auto Logistics Centre, resulted in the Group realizing revenue growth in the Logistics segment by $460 million or 31%. Operating profit for the year amounted to $561 million, an increase of 25% over 2017. The Total Logistics Facility is now a full service warehousing and logistics center and the Global Auto Logistics Center is a secure local and international motor vehicle storage, inspection and delivery center. The Group continued the move to broaden the range of logistics services offered to local and international customers in keeping with the national growth plan for the development of Kingston as a logistics centre for the region.”

Cost of sales for the period grew by 13.4% to a total of $3.75 billion compared to the $3.31 billion for the same period last year.

Gross profit closed the period at $3.50 billion, a 14.4% increase from the $3.06 billion recorded a year ago.

Other operating income for the period surged year over year to total $159.52 million (2017: $31.03 million).

Administrative expenses for the year increased by 12.9%, amounting to $1.20 billion from the $1.06 billion recorded for the same period last year.

As such operating profit closed the year end at $2.46 billion, a 21.4% or $433.48 increase relative to the $2.03 recorded for the comparable period in 2017.

Finance costs for the period rose 61.1% total $217.38 million relative $134.92 million recorded for the same period in 2017.

Profit before taxation closed the period at $2.24 billion, growing 18.6% year over year (2017: $1.89 billion).

Taxation charges amounted to $268.05 million for the year end, a 9.7% increase relative to the charges of $244.27 million incurred for same period last year.

Notwithstanding, net profits attributable to shareholders rose by approximately 19.5% to total $1.95 billion relative to $1.63 billion recorded for the corresponding period in 2017. Net profits attributable to shareholders for the quarter amounted to $ 522.82 million, a 16.5% increase relative to the $448.72 billion recorded for the same period a year ago.

Consequently, earnings per share for the year ended December 31, 2018 amounted to $1.36 (2017: $1.14).The total number of shares used in the calculations amounted to 1,430,199,578 units. Earnings per share for the quarter amounted $0.37 relative to the $0.31 recorded for same quarter in 2017. Notably, KW’s stock price closed the trading period on March 1, 2019 at a price of $75.16.

KW stated, “The strategic development programmes that were initiated in the previous year yielded positive results for the Group in 2018. The Total Logistics Facility and the Global Auto Logistics Centre, have been a powerful catalyst for greater diversification in the range of services offered, streamlined and improved customer engagement, enhanced revenue generation and profitability. Both facilities made significant improvements to their security arrangements and to the processes, technology and equipment that strengthen their inventory control and operating efficiency. KWL combined its investment in technological innovation, capacity expansion and efficiency with an intensive employee development and retention strategy. These measures bolstered the Company’s drive to attain global standards in both terminal operations and logistics and ancillary services (such as security and the handling of specialized cargo). With a view to maximizing growth opportunities in 2019, KWL’s strategic focus will be on staying the course of capacity-building, product and service diversification and enhanced security and inventory control measures to efficiently serve multiple client segments. This will be supported by an accelerated digital strategy through the use of the Port Community System and other technological solutions to streamline processes and boost operational efficiency.”

Balance Sheet Highlights:

As at December 31, 2018, the company’s assets totaled $31.46 billion relative to $29.48 billion a year ago, a 6.7% or $1.98 billion increase. The growth in assets was driven mainly by increases in both ‘Short Term Investments’ and ‘Retirement Benefit Asset’ which closed at $4.46 billion and $1.99 billion respectively, from $3.57 billion and $1.17 billion respectively in 2017.

Shareholders’ Equity amounted to $24.77 billion compared to equity of $22.98 billion reported in 2017. KW posted book value per share of $17.32 (2017: $16.07).

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