Chairman's Report at the 2022 ICTSI Annual Stockholders' Meeting

The global pandemic raged on in its second full year with cases surging at different times and lockdowns being imposed in one region or another.  In spite of this, the Company had its best year ever in 2021.

In every metric, whether financial or operational, International Container Terminal Services, Inc. (ICTSI) set new records both with our organic and new terminals.

Group Volume

We handled consolidated volume of 11,163,473 twenty-foot equivalent units (TEUs) in 2021, higher by 10 percent compared to the 10,193,384 throughput in 2020.  

The double-digit growth was primarily a result of improving trade as lockdowns and restrictions began to ease, and securing new shipping line contracts at certain terminals.  Without the contribution of our new terminal Onne Multipurpose Termcinal (OMT) in Nigeria, consolidated volume would have increased by nine percent.

Financial Performance

Gross revenues from port operations grew by 24 percent in 2021 to USD1.87 billion compared to USD1.51 billion in 2020. Aside from improving demand for trade, contributing to revenue growth were a favorable impact of foreign exchange in certain terminals and the contribution of new terminals.  Without the contribution of these new terminals, consolidated gross revenues would have increased by 21 percent. 

Consolidated EBITDA increased 30 percent to USD1.14 billion in 2021, from USD876.83 million in 2020.  This is the very first time that the Company generated EBITDA of over USD1 billion.  EBITDA margin increased to 61 percent in 2021 from 58 percent.  

Consolidated cash operating expenses in 2021 was 15 percent higher at USD523.33 million compared to USD453.63 million.  The increase was mainly caused by the surge in prices of fuel and power, and costs associated with the new terminals.  Consolidated cash operating expenses would have increased by 12 percent without the costs of the new terminals.

Net income attributable to equity holders of USD428.57 million was the highest ever, and was 321 percent higher than the USD101.76 million earned previously.  The four-fold increase was due to higher operating income and non-recurring charges in 2020. In addition, equity in net loss of joint ventures was practically reduced to zero, from a USD12.27 million loss in 2020, because of our higher share in net income from Manila NorthPort and lower net loss in Colombia.

Diluted earnings per share increased 813 percent to USD0.18, from USD0.02 in 2020.  Excluding non-recurring charges, recurring net income attributable to equity holders of the parent in 2021 was 57 percent higher at USD442.83 million compared to the USD282.07 million the previous year.

Business Development

In March, we signed an agreement with the Nigerian Ports Authority to develop and operate OMT in Rivers State, Nigeria.  After only 2 months, our fourth African terminal was ready for business.
Victoria International Container Terminal (VICT) in April serviced the MV Soroe Maersk, the longest vessel to ever call at the Port of Melbourne.

In June, we acquired full ownership of Manila Harbor Center Port Services, the largest international breakbulk and bulk operation at the Port of Manila.  We now have 10 terminals in the Philippines.

In the same month, Adriatic Gate Container Terminal in Croatia celebrated its 10th year with the handling of its 2 millionth TEU.

In July, we added rail logistics to our operations when ICTSI Rio Brasil formed IRB Logistica to operate the Floriano Intermodal Terminal in Barra Mansa, Rio.

Basra Gateway Terminal handled its three millionth TEU in August, coinciding with its seventh anniversary.  Not far behind, Pakistan International Container Terminal handled its 10 millionth TEU since operating in 2002.  

We ended the year on a high point, securing a 15-year concession extension for Madagascar International Container Terminal (MICTSL) in the Port of Toamasina, our first African terminal.

Fund Management

Since March 2019, we drastically cut back on our capital expenditures, allocating funds only for projects already started and for terminals with very high growth.

Capital expenditure, excluding capitalized borrowing costs, in 2021 amounted to USD165 million. These went into ongoing expansion at Manila International Container Terminal (MICT), Matadi Gateway Terminal (MGT) in the Democratic Republic of the Congo, VICT in Australia, Contecon Manzanillo (CMSA) in Mexico, acquisition and upgrades in infrastructure and equipment at OMT and Contecon Guayaquil (CGSA) in Ecuador.

The Group’s capital expenditure budget for 2022 is approximately USD330 million. This will be used to pay the concession extension upfront fees for MICTSL, expansion at MICT, MGT, VICT and CMSA.

During the year, we recalibrated our capital structure by successfully repurchasing USD185 million worth of 5.875 percent and USD85 million of 4.875 percent of senior guaranteed perpetual capital securities with call dates in 2022 and 2024, respectively.  To fund the tender offer, we priced and launched in a separate transaction a new issue of 10-year 3.5 percent fixed rate senior bonds amounting to USD300 million.  These combined transactions will reduce the Company’s overall financing cost, enhance return on equity and reflect the rising cash flow from international subsidiaries in our long-term balance sheet strategy. 

Always mindful and prepared

Just as the pandemic seems to be waning so far, new challenges emerge as war clouds engulf Europe with the Russian invasion of Ukraine. We seem to be in a global cycle of one crisis after another.  Although the war is mainly a European affair, we can all expect to feel the impact globally in terms of the global economy, stability and security.

We are confident of the performance of ICTSI going forward, but we are mindful of the challenges we face with these global events.

I am grateful to the strong and loyal men and women of the Group who solidly performed through all the challenges of the last two years.  I also thank our shareholders who steadfastly accompany us in this journey.