S'pore port operator's net profit declines
S'pore port operator's net profit declines
Agence France-Presse, Singapore
PSA Corp. of Singapore, the world's largest container terminal operator, said that its net profit for 2002 dipped as it slashed rates due to competition and provided for losses from a Mid-East joint venture.
Its net profit for the year to December fell 23.5 percent to S$559.9 million (US$325.52 million) compared with the previous year's S$732.2 million.
Total turnover rose 29.5 percent to S$2.96 billion due to contributions from its Belgian subsidiary Hesse-Noord Natie (HNN) and a joint venture port project in Guangzhou, China.
PSA chairman Stephen Lee attributed the losses to lower revenues from its Singapore operations resulting from one-off discounts as it fought to retain customers and a loss provision for a port venture in the Yemen.
"We signaled our resolve to compete with one-off rebates to customers... and we provided for impairment loss at a port venture in the Middle East due to the difficult and uncertain operating environment there," Lee said in a statement.
"These measures impacted our bottom line in 2002," he said on Friday.
PSA's core container terminal operations handled a total 24.5 million 20-foot equivalent units (TEUs) in 2002.
Its flagship operations in Singapore handled 16.8 million TEUs, up eight percent from last year, while volumes at overseas terminals soared 116 percent to 7.8 million TEUs.
But rising competition, particularly from the neighboring Port of Tanjung Pelepas in Malaysia -- which has snared two of PSA's biggest clients in recent years -- has forced the company to trim down and restructure.
In February, it laid off 800 of its 6,000 employees, or 13 percent of its work force, to reduce costs.
It also divested its non-core businesses and reorganized the company to focus on its core competence and respond more rapidly to competition.
Global credit rating agency Standard and Poor's said on Friday that PSA's net loss was within expectations and would not affect its AAA rating.
While PSA had become a net debtor when it used internal resources to fund its 80 percent stake in HNN, "its financial profile remains very strong," S and P said.
"Credit measures should remain strong, given various measures undertaken during the first quarter of 2003 to improve profitability, such as reducing staff numbers and divesting its lower-margin non-core assets," it said.
S and P said it also believed Singapore's government had "a strong interest in ensuring the financial health and viability of the company, given the strategic importance of its assets."