PSA profit falls amid shipping industry woes

PSA handled 64.1 million standard- sized containers last year, marking a 2 per cent dip from the previous year.
PSA handled 64.1 million standard- sized containers last year, marking a 2 per cent dip from the previous year.ST PHOTO: JAMIE KOH

Earnings drop 9.5% but company chiefs maintain confident outlook

Tepid demand in the shipping industry again proved to be a drag on full-year earnings at port operator PSA International last year.

The group yesterday posted a 9.5 per cent drop in net profit to $1.27 billion for the year ended Dec 31.

Revenue slid 6.7 per cent to $3.57 billion, while profit from operations sank 9.3 per cent to $1.71 billion due to "lower volumes and higher depreciation", it said in a statement.

PSA handled 64.1 million standard-sized containers last year, marking a 2 per cent dip. Its flagship Singapore Terminals saw throughput decline 8.7 per cent to 30.6 million containers. PSA terminals outside Singapore, however, delivered a total throughput of 33.5 million containers, up 5 per cent.

The group said that its balance sheet remains strong with a gross debt equity ratio of 0.44 times at the close of 2015.

PSA group chairman Fock Siew Wah noted that the volatility that persisted in the global marketplace last year "caused a general loss of confidence on all fronts... culminating in sluggish or lower growth for most economies including China, which had been for the past decade one of the world's key growth engines".

"The container shipping industry was not spared as it grappled with softening trade and demand, excess tonnage capacity and depressed freight rates," he said.

"Amid this troubling economic landscape, and despite anticipating and preparing for the then oncoming storm, PSA was nevertheless adversely affected, albeit to a lesser extent than would be otherwise. The ongoing turbulence and decline of market confidence will undoubtedly test our mettle but we remain undaunted."

Group chief executive Tan Chong Meng similarly acknowledged that the industry is facing "difficult, uncertain times", but added that it is "also challenging and exciting".

"The unprecedented pace of change is vexing the best minds in our industry and I am convinced that it will also shake up how industry players collaborate or compete in this dynamic environment."

But Mr Tan added: "We take the tough business conditions in our stride and remain confident that PSA has in place the right fundamentals to pursue our long-term goals and strategies.

"We will continue to invest, upgrade, give of our best to our customers and partners, and work alongside them to ride out the choppy waves towards calmer horizons."

Singapore remains the world's second busiest port after Shanghai, which handled 36.5 million containers last year.

A version of this article appeared in the print edition of The Straits Times on March 19, 2016, with the headline 'PSA profit falls amid shipping industry woes'. Print Edition | Subscribe