Published March 28, 2009

PSA full-year profit takes 46% tumble

The outlook remains weak, with throughput continuing to slide 19.8% year-on-year in Feb

By VINCENT WEE

	Email this article
	Print article
	Feedback

INEVITABLY, the malaise in global trade has hit PSA International, the world's second-biggest container terminal operator.

Plunging container volume and smaller margins in the last quarter of 2008 cut PSA's full- year net profit 46 per cent to $1.04 billion, from $1.93 billion in 2007. It was the first drop in profit in six years.

Although volume grew 7.3 per cent year-on-year in 2008 to 63.2 million twenty-foot equivalent units (TEUs), a collapse in demand on major trade lanes in the fourth quarter led to a contraction in throughput at the port of Singapore for the first time in over six years in November.

And the 1.5 per cent drop that month snowballed into a double-digit decline in December.

The outlook remains weak, with throughput continuing to slide 19.8 per cent year-on-year in February and 6.3 per cent from the month before.

PSA's revenue rose 5.8 per cent in 2008 to $4.39 billion, from $4.15 billion in 2007. But other income plunged by more than half to $491.4 million, from $1.12 billion previously. And current borrowings due this year ballooned to $1.78 billion, from $660.9 million previously.

The group's flagship Singapore terminal handled 29 million TEUs in 2008, helping Singapore maintain its position as the world's busiest container port for a fourth consecutive year.

PSA's overseas terminals handled 34.2 million TEUs last year, 7.7 per cent more than in 2007.

'2008 was shaping up to be another record-breaking year, with the first seven months bringing strong volume surge and record volumes,' said PSA chairman Fock Siew Wah.

'Unexpectedly, there was a sharp and abrupt business decline in the latter part of the year as the global financial crisis rapidly deteriorated into a major global slump and recession.'

PSA's chief executive Eddie Teh said: 'I see an extremely tough and increasingly challenging year in 2009, with more and more economies falling prey to the collapse of the financial systems, and global trade almost grinding to a halt.'

PSA's 2008 revenue contribution breakdown was similar to that in 2007 - almost equally split between Singapore operations and those elsewhere.

Outside Singapore, European terminals were the biggest contributors, raking in revenue of $1.4 billion that represented 32 per cent of group turnover. Revenue from China terminals remained at 4 per cent of total turnover, while newly acquired terminals in the Americas contributed 3 per cent of the total.

Profit from port operations was $1.44 billion, 21.7 per cent down from the previous year's $1.84 billion.

Singapore port operations continued to be the major contributor, posting more than 50 per cent of profit from port operations.

Non-port revenue declined to $305 million after the divestment of the group's offshore marine business in 2007, while profit plunged 83.2 per cent to $106 million from $632 million previously.