Westports 1Q net profit down 27% on one-off prosperity tax; lower container throughput handled

KUALA LUMPUR (April 26): Port operator Westports Holdings Bhd saw its net profit fall 27.1% to RM151.85 million for the first quarter ended March 31, 2022 (1QFY22) from RM208.32 million a year ago, no thanks to the one-off prosperity tax in 2022, and the absence of other income of RM20 million recognised in 1QFY21 that was part of a progressive insurance reimbursement for a 2019 vessel incident.

As a result, earnings per share came in lower at 4.45 sen for 1QFY22 compared with 6.11 sen for 1QFY21.

This was despite revenue for the quarter rising 1.6% to RM516.36 million from RM508.16 million in 1QFY21, primarily driven by growth in container revenue, particularly value-added services.

Westports said it made a tax provision of RM97 million or an effective tax rate of 39% due to the prosperity tax.

On prospects, Westports said the conflict in Europe, the Covid-19 effects on China and soaring inflation are not conducive for global economic growth.

"With more economic headwind risks, the company is now projecting possibly near identical container throughput volume in the current year compared with the previous year. The guidance would be updated should material developments evolve and affect the company’s expected volume trajectory," it said in a filing with Bursa Malaysia on Tuesday (April 26).

In a separate statement, Westports said the container segment contributed 88% to the group's revenue by handling a throughput volume of 2.39 million twenty-foot equivalent units (TEUs) in 1QFY22. However, this was a 10.2% decline from the 2.66 million TEUs handled in 1QFY21. It blamed the lower quarterly volume to disturbances in the European supply chain, economic sanctions and closures of some ports at various points in time in Asia.

Of the total container throughput, transhipment and gateway volumes totalled 1.42 million TEUs and 970,000 TEUs respectively. Bulk cargo amounted to 2.66 million tonnes in 1QFY22.

“External developments became more challenging as the quarter progressed. Military incursion, sanctions, inflationary pressures, and selected ports closure at various times in the Far East have collectively added to the ongoing supply chain challenges," said Westports group managing director Datuk Ruben Emir Gnanalingam Abdullah.

"The company experienced a 52% increase in fuel cost as our terminal operating equipment uses fuel input which is priced commercially and is not subsidised,” he added.

Ruben also noted that Westports has set up a Board Sustainability Committee, which will oversee policies and practices relating to environmental, social and governance (ESG) and sustainability matters. "The company will now commit to a sustainability aspiration and target to achieve net-zero carbon emissions by 2050. We will primarily focus and rely on emissions intensity reduction and decarbonisation to achieve the target by 2050.”

At noon break on Tuesday, Westports shares closed up two sen or 0.51% to RM3.94, valuing the group at RM13.37 billion. Year to date, the counter's share price has fallen 1.5%.