PSA profit falls for second straight year

Robin Chan, Straits Times 4 Apr 10;

Port operator PSA International saw profit fall for the second year in a row last year, as a result of a global recession that saw world trade volumes fall off a cliff and devastate the shipping industry.

Net profit slid 6.1 per cent in 2009 to $976 million from the year before. Revenue fell 12.7 per cent to $3.8 billion over the same period as the total number of containers handled by PSA across its 28 ports around the world fell for the first time in history.

The volume of containers PSA moved fell 9.9 per cent from the year before to 56.9 million twenty-foot equivalent units (TEUs).

Its Singapore operations saw container throughput decline 13.1 per cent to 25.1 million TEUs, although it still remained the busiest container port in the world last year.

Its port operations outside of Singapore fell for the first time, with a 7.1 per cent drop to 31.8 million TEUs.

As a result, PSA implemented cost-cutting measures that saw a reduction in staff costs as well as running and repair costs.

'2009 would be remembered as one of the world's most difficult years, with the near meltdown of the financial markets resulting in a global recession and a plunge in world trade,' said Mr Fock Siew Wah, PSA International's group chairman.

'As we enter the new year, we retain a very cautious outlook and are not sanguine about a swift recovery.'

This was PSA's second consecutive yearly drop in net profit after a 46 per cent decline from 2007 to 2008 as the global recession started to hurt world trade in the second half of 2008.

The results come on the heels of global data that is showing that economic regions around the world are recovering, but at different speeds. Asia is bouncing back quicker than the United States and Europe.

Container throughput at Singapore's ports has risen for four straight months with 2.18 million boxes moved in February, since it hit a low of 1.85 million a year ago.

World trade is expected to grow 9.5 per cent this year, after suffering its biggest collapse since World War II last year, World Trade Organisation chief Pascal Lamy said last week.

But the container shipping industry expects to see difficult times ahead as freight rates struggle to rise amid a massive oversupply problem.

Shipping lines have resorted to keeping some ships idle, scrapping others and running those in operation at slower speeds.

There are also concerns that the recovery in demand has been a result of factories replenishing their stocks rather than genuine new demand from the consumer.

'The last two months of 2009 and the first two months of 2010 showed tentative signs of recovery but the road ahead will be bumpy and uncertain, and all indications point towards a slow and drawn- out recovery with different regions rebounding at different rates,' said Mr Eddie Teh, group chief executive of PSA International.

'The fear remains that a macro- economic storm will be inevitable to clear all the excess global production capacity that was created.'

2009 net profit for PSA International falls 6% on year to about S$976m
Melvin Yong Channel NewsAsia 3 Apr 10;

SINGAPORE: Port operator PSA International said its 2009 net profit fell six per cent on year to about S$976 million.

It's the second straight year of profit decline but still a vast improvement from the 46 per cent drop in profits in 2008 compared with the previous year.

The company said the drop was due to a contraction in global trade last year as a result of a worldwide economic slump.

Revenue fell 12.7 per cent to S$3.8 billion.

Last year, PSA handled 56.9 million twenty-foot equivalent units or TEUs, down 9.9 per cent from 2008, its first ever decline in containers moved.

PSA's flagship terminal in Singapore handled 13 per cent fewer containers on year in 2009 at 25.1 million TEUs.

This was still enough to help Singapore retain its position as the world's busiest container port for the fifth consecutive year.

For its terminals outside Singapore, PSA handled 31.8 million TEUs in the same period, down about seven per cent on year. - CNA/vm