Kingston Wharves procures crane, quadruples capital spending
Published:Wednesday | June 2, 2021 | 12:08 AMSteven Jackson/Senior Business Reporter
Port company Kingston Wharves Limited, KW, invested $800 million in its terminal operations between January and March, four times more than the funds spent in the similar period a year ago.
The expenditure included the acquisition of a new crane in preparation for an expected rise in shipping volumes, concurrent with the reopening of the global economy as populaces are vaccinated against the coronavirus.
“Given the economic climate, with low interest rates, now is the time to invest,” said Kingston Wharves CEO Mark Williams in an interview with the Financial Gleaner on Tuesday.
Williams said the company plans to do other investments, but would speak to the details at the company’s upcoming annual general meeting scheduled for June 17.
The capital expenditure, or capex, in the first quarter already represents the company’s largest capex since 2018.
Kingston Wharves, which serves more than 30 destinations worldwide, disclosed in its latest financial report that it achieved special economic zone, or SEZ, status in the June quarter of 2020, which allows it to offer services to clients at lower costs. Williams expects the designation to boost the company’s vehicle trans-shipment service.
“If you want to move a few thousand cars, but do not know the ultimate destination of them, then a special economic zone is good for that,” he said.
Kingston Wharves’ SEZ designation has heaped new fees on to the company, and was partly credited for the port company’s flat profits of $560 million in the March first quarter, but Kingston Wharves has not disclosed how much it pays to the Jamaican SEZ authority, JSEZA.
“It comes with a reduced tax rate at the headline level; but the fees to be a developer, they are huge,” he said, while noting that the value of having the designation far outweighs the fees. “We are looking at the larger business opportunity based on our global reach,” he said.
The pandemic also flattened the company’s March quarter revenue at $1.85 billion.
Since 2016, the Kingston Wharves has invested heavily in a logistics terminal and other facilities, which served to grow its total assets over that seven-year span from $23 billion to $39 billion.
The terminal operations represent the larger division of the group, contributing two-thirds of revenue. It includes KW’s berths, cranes to load vessels, and vehicles to move containers. The downturn in terminal activities was partially offset by the performance of the logistics division, which increased revenue and profit. The latter division offers services such as property rental, cold storage facilities, port security and logistics.