APM Terminals Q3 Interim Results

• Profit of USD 345m (USD 203m) impacted by divestment gains of USD 219m after tax partly offset by impairments of USD 74m (USD 0m)
• ROIC of 22.5% (14.2%)
• Number of containers handled was 9.7m TEU (9.3m TEU)
• Sale of APM Terminals Virginia, Portsmouth, USA completed
• Cash flow used for capital expenditure was more than offset by cash flow generated by divestments, leading to a positive investment cash flow of USD 570m (negative USD 222m).

FINANCIAL PERFORMANCE 

Q3 2014 showed a profit of USD 345m compared to USD 203m in the same quarter 2013 due to the divestments of Terminal Porte Océane, France and APM Terminals Virginia, USA as well as the 4.4% volume growth and higher revenue per move across the portfolio. Return on invested capital (ROIC) reached  22.5% (14.2%).

The underlying result excluding one-offs came at USD 211m (USD 195m).
Revenue remained in line with same quarter last year.
For the Port Activities, the increase in revenue exceeded the 4.4% volume growth partly offset by lower revenue for Inland Services due to divestment of activities in North America and Asia as part of the continued efforts to optimize the portfolio.
The EBITDA-margin improved to 23.1% (21.5%), supported by improvements in operational and commercial efficiencies. More than 80% of EBITDA was generated in growth markets, where 42 out of 64 container terminals are located and operating.
Impairments of USD 74m (USD 0m) were recognised in Q3 2014 of which USD 52m was related to joint venture companies. The share of profit from joint venture companies was also negatively impacted by deferredtax adjustments triggered by foreign exchange movements and contributed with a loss of USD 31m compared to a profit of USD 32m in Q3 2013.

The increase in the effective tax rate to 32.4% (9.5%) was primarily due to expiration of local tax incentives within the portfolio. Albeit continued high investment activity, invested capital only increased slightly by 0.6% to USD 5.9bn (USD 5.8bn) impacted by recent divestments. At the end of Q3 2014 the portfolio consisted of 64 terminals, with 16 expansion projects in progress and seven new terminals under implementation.
Operational cash flow was positively impacted by working capital management.

MARKET DEVELOPMENT

The global container terminal market measured in TEU increased by 5% in Q3 (Drewry). The number of containers handled by APM Terminals (measured in crane lifts and weighted with APM Terminals’ ownership interest) grew by 4.4% compared to Q3 2013 to reach 9.7m TEUs.
This was driven by broad growth across the portfolio.

PORTFOLIO DEVELOPMENTS

In Q3, APM Terminals completed the sale of both the 100% share of APM Terminals Virginia, Portsmouth, USA and the 50% share in Terminal Porte Océane, Le Havre, France with combined gains of USD 359m or USD 219m after tax.The announced sale of 50% share of Port Elizabeth, N.J.,USA, was abandoned due to lack of regulatory approvals. In Liberia, the Ebola outbreak is being closely monitored.The port in Monrovia, which is operated by APM Terminals, remains open and in full operation. APM Terminals is continuously monitoring the political developments in Russia and their impact on the Russian port business.

SAFETY PERFORMANCE

APM Terminals suffered three fatalities in areas under operational control in Q3 bringing total fatalities to nine in 2014, of which three were employees, three were outside contractors and three were third parties. The lost time incidents frequency (LTIF) for the last four quarters was 1.45 (1.96) per million working hours.

To reduce risk of severe human accidents APM Terminals is continuing to focus on improved positioning of containers in the yard (Stack Profiling) across controlled terminals to mitigate the risk of containers in the stack being hit by containers being lifted. Prototyping of a retrofit device that will measure and limit the path of Rubber Tyred Gantry spreaders to ensure safe and productive operations is currently being tendered.