KUALA LUMPUR(July 25): Westports Holdings Bhd’s net profit fell 18.1% to RM121.81 million in the second quarter ended June 30, 2018 (2QFY18) from RM148.82 million a year ago, as a result of higher depreciation and finance costs during the current quarter following the completion of Container Terminal 8 (CT8) and CT9, and the absence of an investment tax allowance that was previously claimed in 2QFY17.

Earnings per share came in lower at 3.57 sen for 2QFY18 compared with 4.36 sen for 2QFY17.

Quarterly revenue also dropped 21% to RM394.04 million from RM501.44 million in 2QFY17, due to adoption of the MFRS 15 accounting standard from Jan 1.

Nevertheless, the group declared a first interim dividend of 5.4 sen per share amounting to RM184.1 million for the financial year ending Dec 31, 2018, payable on Aug 20.

The weaker quarterly performance dragged the group's net profit for the cumulative six months (1HFY18) down 15.2% to RM245.61 million from RM289.71 million a year ago, while revenue fell 24% to RM779.13 million from RM1.02 billion in 1HFY17.

In a statement today, Westports said it also handled 4.3% less containers in 1HFY18 to 4.5 million TEUs (20-foot equivalent units) compared with 4.7 million TEUs achieved in 1HFY17.
 
Nevertheless, its indigenous cargo rose 20% year-on-year (y-o-y) in 1HFY18, reflecting favourable domestic economic activities growth.

Westports said the intra-Asia segment showed continued favourable momentum with a growth of 10% y-o-y, thus raising the trade lane’s contribution to Westports overall container volume to 61% in 1HFY18.

For conventional cargo, Westports handled a total throughput of 5.3 million tonnes, with higher volume recorded in the break bulk segment.

Westports group managing director Datuk Ruben Emir Gnanalingam said the container shipping industry experienced a major realignment changes in the previous year, especially with the formation of new global alliances, as well as mergers and acquisitions among the container shipping lines.

“These changes have adversely affected our transhipment volume, but Westports have transitioned successfully towards serving the new services under the Ocean Alliance.

"Based on Westports overall improving container volume momentum, we are at the tailend of establishing a new volume baseline, from which we can establish future growth levels,” he said.

On its container terminal expansion,  Ruben said the completion of CT8 and CT9 in 2017 has increased Westports' total container handling capacity to 14 million TEUs per year.

“The additional capacity is currently accommodating the largest container vessels of more than 20,000 TEUs that call at Westports and has further strengthened Port Klang as the pre-eminent port for the nation’s gateway trade and also being one of the main transhipment hubs in the region.

“We are reinforcing Westports' role in facilitating Malaysia and the region’s economic development and also trade requirements by proposing an expansion that would eventually double the current terminal handling capacity,” he added.

The group shared that its total outstanding sukuk stood at RM1.5 billion and the proceeds have been used to part-finance the development of the container terminal expansion. The total capital expenditure spent on CT8 and CT9 in recent years was more than RM1.7 billion.

With regards to tariffs imposed by some major trading nations, Ruben cautioned that global international trade has been the foundation of the world’s unparalleled growth which saw many countries and regions enjoy unprecedented economic development.

“The tariffs currently imposed could affect global trade flows. However, after some initial dislocations, a new equilibrium would emerge, and trade between nations will still be the preferred paradigm for growth,” he said.

At 4.22pm, Westports shares were down 2 sen or 0.57% at RM3.46, with 299,400 shares done, bringing a market capitalisation of RM11.94 billion.