March 08, 2015

ICT 2014 core earnings flat YoY on start-up costs of new ports

In a disclosure to the Exchange, ICTSI said its net income rose 6% YoY to US$182m. This however, included non-recurring items such as the write-down on TECPLATA intangibles relating to its investment in Argentina, gains on its sale of CICTI and YRDICTL amounting to a net gain of US$9.3m.

Stripping out this gain, earnings would have been flat at US$173m. This was primarily due to increased depreciation and construction costs relating to its newly acquired ports. Revenues on the other hand increased 24% on the back of an 18% increase in volume. Excluding contribution from new ports, organic volume was up 8% YoY.

As a result EBITDA was up 17% YoY. Moving forward, ICT announced that in February 4, 2015, it has acquired the 10% non-controlling interest of Anglo Ports Pty Limited and now owns 100% of VICT of Melbourne, Australia.

Our take: Notwithstanding the flat growth, ICT’s core net income still came 3.3% above consensus forecast. We note however the strong growth in volumes which was accompanied by a strong increase in yields per TEU resulting in a 24% increase in revenues.

Going forward, earnings should still be weighed by the start-up costs for the new ports which could persist until the end of the year. Once the company has gone through the short-term pain, we believe it should reap the rewards of its investments starting next year as its new port in Congo opens by mid-2016 and as Melbourne begins operations by 4Q16. Likewise, while its port in Iraq starts contribution this year, full development of the port is still expected to be completed by 2Q2016. – WealthSec