KW reports a 14% increase in six months net profit attributable to shareholders

Date: August 14, 2018

Kingston Wharves Limited (KW), for the six months ended June 30, 2018 revenue totaled $3.39 billion a 15% increase when compared to $2.94 billion for the corresponding period of the prior year, while revenue for the second quarter grew 13% to $1.76 billion (2017: $1.55 billion). This as both the company’s ‘Terminal Operations’ and ‘Logistics & Ancillary Service’ segments reported increases.

o The ‘Terminal Operations’ which accounted for 82% of total revenues, increased 21% year over year to a total of $2.78 billion relative to $2.30 billion last year. According to KW, “Underpinning this continued growth is the strategic focus on attracting multiple users to our terminal with a diversity of cargo-types.”

o The company’s ‘Logistics & Ancillary Services’ grew 22%, to total $825.46 million, up from $675.94 million. The company highlighted that, “These results were driven primarily by an expansion of our customer base, particularly in third party logistics (“3PL”) services and continued gains resulting from KWL’s ongoing investment in automotive logistics.”

Cost of sales rose 18% to a total of $1.80 billion (2017: $1.52 billion). Nevertheless, gross profit grew by 12% for the period to total $1.59 billion relative to $1.42 billion recorded a year ago. Gross profit within the second quarter rose 12% to close at $846.14 million compared to $758.82 million booked for the quarter ended June 30, 2017.

Other operating income soared year over year, to total $164.13 million (2017: $40.03 million). Administrative expenses went up by 8%, amounting to $583.71 million relative to $542.62 million for the same period last year.

As such, operating profit closed the period at $1.17 billion, 28% more than the prior year’s corresponding quarter of $918.26 million. Operating profit for the quarter improved 39% to $675.07 million versus $485.36 million in 2017.

Finance Costs for the year advanced 89%, to close at $116.26 million for the period relative to $61.50 million booked for the corresponding period in 2017.

Profit before taxation rose 23% to $1.06 million for the period in contrast to the $856.76 million in 2016.

Income tax expense for the period increased 88% to $200.16 million compared to $106.19 million for the corresponding period in 2017. Profit for the six months moved from $750.57 million to $855.38 million, a 14% growth year over year.

Net profits attributable to shareholders for the six months rose by approximately 14% to total $842.45 million relative to $741.88 million in 2017. Second quarter profit attributable to shareholders improved 16% to close at $473.98 million. (2017: $409.40 million).

Earnings per share for the six months ended June 30, 2018 amounted to $0.59 (2017: $0.52), while for the quarter, the EPS was $0.33 (2017: $0.29). The trailing earnings per share EPS totaled $1.21. The total number of shares used in the calculations amounted to 1,430,199,578 units.

Management indicated that it plans to, “maintains a cautiously optimistic outlook for both its Terminal Operations and its Logistics Services Divisions. The company was able to successfully navigate Kingston Wharves Limited | 2018 several challenges while berthing key business development successes during the first half of the year as it consistently demonstrated strong commitment to servicing the domestic, regional and international cargo and logistics markets.

In addition the company is anticipating that, “the pending designation of its global automotive logistics center as a Special Economic Zone (SEZ) will unlock the pipeline of growth and propel Jamaica into this fast growing 3PL segment. The application of the SEZ framework and other port-related regulatory initiatives to make Kingston globally competitive in the logistics space are urgent and absolutely essential if Jamaica is to achieve the full potential of this important sector. In this regard, we are pleased to see the development and launch of the Port Community System. We stand ready to work with the Port Authority of Jamaica, Jamaica Customs and other public and private sector interests to play our part to facilitate this initiative and look forward to the prospects arising from other required initiatives going forward. Additionally, throughout the remainder of 2018, KWL will continue to undertake initiatives geared towards increased efficiency in its terminal operations, chiefly, the demolition of an aged on-dock warehouse and the re-composition of the terminal space and design.”

Balance Sheet Highlights:

As at June 30, 2018, the company’s assets totaled $30.35 billion relative to $23.94 billion a year ago, an increase of 27%, which was driven mainly by an increase in ‘Property, Plant and Equipment’ to total $22.83 billion from $18.50 billion. Short term investments assets also contributed to the growth in the asset base with a 45% increase to $4.09 billion (2017: $2.83 billion).

Shareholders’ Equity amounted to $23.27 billion compared to equity of $19.04 billion reported as at June 30, 2017. The Company now has a book value per share of $16.27 (2016: $13.31).

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