Global port operator International Container Terminal Services Inc. (ICTSI) tallied an impressive growth momentum in 2024, growing its net income by 66 percent despite geopolitical and policy uncertainties that could dampen global trading.
Based on its financial report, ICTSI’s net income grew to $830.94 million from the previous year’s $511.53 million.
Ports and casino magnate Enrique Razon Jr., chairman and president of ICTSI, said this marks its highest net income in the operator’s 37-year history.
ICTSI handled 13.07 million twenty-foot equivalent units (TEUs) of cargo shipments last year, two percent higher than the 12.75 million TEUs in 2023.
This growth was attributed to improving trade activities at certain terminals, particularly the contribution of Visayas Container Terminal (VCT), the new terminal in Iloilo.
It was partially offset by the decrease in volume at Contecon Guayaquil S.A. (CGSA) in Ecuador, the expiration of the concession contract at the Pakistan International Container Terminal (PICT), and the deconsolidation of the Olah Jasa Andal (OJA) in Indonesia.
“Excluding the impact of new operations in the Philippines and discontinued operations in Pakistan and Indonesia, the group’s consolidated volume would have increased by five percent,” ICTSI’s report said.
Revenue from port operations increased by 15 percent from 2023’s $2.39 billion to $2.74 billion last year.
This was driven by volume growth with a favorable container mix, tariff adjustments, higher revenues from ancillary services, and increase in general cargo activities in certain terminals.
While global trade appears upward, ICTSI is cognizant of unforeseen changes that may upend this positive outlook.
In its annual report submitted before the Securities and Exchange Commission (SEC), the operator noted that it is exposed to a number of trends that can affect its recurring revenues and profits.
ICTSI cited the Pillar Two Global Anti-Base Erosion (GloBE) rules, which imposed a global minimum tax rate of 15 percent on multinational enterprises.
As an operator of 32 terminals in 19 countries, ITCSI said it still has “no significant exposure” to this tax scheme.
The company also identified the Russia-Ukraine and Hamas-Israel conflicts, given their potential to “disrupt businesses and institutions and pose threat to world trade and economies, in general.”
It clarified that these conflicts “had no material impact” on business operations, noting that the scale and duration of these events “remain uncertain.”
“It is not possible to estimate the overall impact of the wars’ near-term and longer effects. The group will continue to closely monitor the progress of these situations,” the report read.
Razon said amid the “complex geopolitical backdrop”, ICTSI’s performance in 2024 “demonstrate the strength and resilience of our globally diversified origin and destination portfolio.”
The operator’s earnings before interest, taxes, depreciation and amortization (EBITDA) went up to $1.78 billion, an 18 percent jump from $1.51 billion in 2023.
On the other hand, operating expenses were 10 percent higher at $727.25 million compared to the prior year’s $662.7 million, fueled by higher volumes and growth in revenue-generating ancillary services.
Razon is upbeat about ICTSI’s performance in keeping its free cash flow, as he credited his colleagues’ “unwavering support.”
“Our cash flow and balance sheet remain strong with free cash flow up by 12 percent to $1.08 billion, giving us the financial strength and flexibility to pursue new opportunities and invest in existing projects,” he said.
The company’s capital expenditures (capex), excluding capitalized borrowing costs, amounted to $517.14 million in 2024.
This year, capex is estimated to be around $580 million for the continued development of new port projects, various other equipment acquisitions and upgrades, and maintenance capex.