INTERNATIONAL Container Terminal Services, Inc. (ICTSI) is keeping a positive outlook for the year, while being cautious on the impact of the looming trade war between the United States and China on its international operations.
ICTSI Chairman and President Enrique K. Razon, Jr. said its operations in Mexico may be affected should the ongoing conflict between the US and China grow into a full-blown trade war.
“The outlook globally is okay, unless of course there’s some disruption with this trade war that could break out… Our only exposure will be Mexico because a lot of the goods going through Mexico come from China,” Mr. Razon told reporters after the company’s annual shareholders’ meeting at Solaire Resort and Casino in Parañaque City yesterday.
ICTSI currently operates two ports in Mexico, which Mr. Razon noted is one of the company’s fastest growing terminals, alongside Iraq. In 2017, the company’s Mexican operations hit a capacity of more than one million twenty-foot equivalents (TEUs).
Mr. Razon said they are aiming to hit 1.5 million TEUs from its operations there, while reaching for a one-million TEU capacity goal in Iraq.
While the looming trade war could affect ICTSI’s Mexican operations, Mr. Razon said the Philippines may benefit should China start looking for other export markets.
“If the trade war between US and China will affect the exports from China to the US, so China may have to find other markets for these exports. So China may actually be beneficial to us, the trade war,” Mr. Razon explained.
Tensions between the US and China have been escalating since US President Donald J. Trump imposed higher tariffs on $50 billion worth of Chinese goods, with plans to further slap additional tariffs on $100 billion worth Chinese products. China has since responded with higher tariffs on $50 billion worth of US goods.
ICTSI booked $182.14 million in net income attributable to equity holders last year, up 1.2% from its earnings in 2016. This was boosted by a 10.3% increase in revenues to $1.24 billion during the year.
Asked if the listed port operator can top its 2017 performance, Mr. Razon said “there’s always a chance.”
“That depends how the start-ups actually start producing cash flow. It’s really driven by that. Because our existing terminals are also growing. It’s really the new terminals, how fast they ramp up. When do they start producing cash, that will drive that,” the ICTSI executive said.
ICTSI raised $400 million from its issuance of senior guaranteed perpetual capital securities last January to finance its capital spending.
Shares in ICTSI dropped P1.60 or 1.67% to close at P94 apiece on Thursday. — Arra B. Francia