Westports’ 4Q18 earnings fall 31%

The port operator says earnings decline is a result of higher tax rate in the quarter as effective tax rate was lower in 4Q17


Westports Holdings Bhd’s net profit for the fourth quarter ended Dec 31, 2018 (4Q18), fell 31% year-on-year (YoY) to RM145.54 million as a result of higher tax rate in the quarter.

In an exchange filing yesterday, the port operator noted the effective tax rate was lower in 4Q17 due to the claim of investment tax allowance.

The company’s revenue for the three months also decreased 27% YoY to RM418.02 million mainly attributed to the adoption of the Malaysian Financial Reporting Standards 15 from Jan 1, 2018.

For the financial year ended Dec 31, 2018 (FY18), the company achieved a profit before tax improvement of 4% over the previous year’s RM701 million.

In the absence of investment tax allowance during the 12 months, the effective tax rate increased to 24%.

The higher tax provision, depreciation charges and higher finance costs arising from the completed container terminal expansion, along with higher manpower expenses for the increased number of employees at Westports, led to a more moderate profit after tax of RM533 million for FY18.

Westports group MD Datuk Ruben Emir Gnanalingam said the company has successfully transitioned towards a new baseline and transshipment volume thereafter improved by 15% in the second half of 2018 (2H18), after five consecutive quarters of transshipment volume declines.

“The favourable momentum in the latter part of the year enabled transshipment volume to register an overall increase to 6.2 million twenty-foot equivalent units (TEUs) for 2018. Meanwhile, gateway container throughput has remained strong with double-digit growth rate throughout the year.

“For 2018, overall gateway volume increased by 18% to 3.3 million TEUs. The intra-Asia segment continued to achieve notable growth and increased its contribution to Westports’ overall container volume to 62%,” he noted.

Westports’ total container volume increased strongly by 16% during 4Q18 over the previous corresponding period with strong domestic and regional economic activities.

The favourable momentum of transshipment volume recovery contributed to its strong growth of 18% for the quarter.

However, the favourable growth momentum in 2H18 offset the subdued initial volume performance at the beginning of the year.

As a result, Westports total container volume increased by 6% during the 12 months of 2018 to 9.5 million TEUs.

Ruben said Westports is expected to achieve higher overall container throughput in 2019 with further organic growth momentum on last year’s baseline volume level.

“We are also evaluating details of the proposed container terminal expansion as Westports plans to further strengthen the company and Port Klang’s role as the pre-eminent port for the nation’s gateway trade, and also as one of the main transshipment hubs in the South-East Asian region,” he added.

Westports has declared a second interim single-tier dividend of 6.33 sen to be paid on March 1, 2019.