Ashford W. Meikle, Staff Reporter
STEPHENSON
KINGSTON WHARVES, which is spending $2 billion to upgrade two of its berths and to modernise its facilities, yesterday announced it has laun-ched an aggressive marketing drive to handle a greater share of the sea cargo into Jamaica.
"Where we are focusing very heavily now is marketing because with the investments that we are doing, we have now employed a marketing executive," the company's chairman and CEO Grantley Stephenson told investors at their annual general meeting yesterday. "We have developed a number of strategies which are being implemented ... and in some instances we are beginning to see the results of those initiatives."
MUTI-PURPOSE
The privately held Kingston Wharves is a muti-purpose port, 98 per cent of whose business is domestic cargo. It controls about 42 per cent of the cargo coming into Jamaica, and while he claims that it is not in direct competition with the giant neighbour on the port of Kingston, the Kingston Container Terminal, Stephenson is clearly keen to grab a bigger slice of the business.
"We look at ourselves as collaborators rather than competi-tors of KCT," he said last night. "But we will be posi-tioning ourselves to handle bigger ships with our current investment."
At present Kingston Wharves can handle ships with a maximum draft of 30 feet, but after the expansion at berths eight and nine, this will increase to ships with a draft of 52 feet.
MORE CARGO
Bigger ships, Stephenson explained, will mean vessels with more cargo, especially containers, which is now the primary mode for the movement of cargo world-wide. Last year Kingston Wharves handled over 83,000 containers and an estimated 1.7 million tonnes of breakbulk cargo -- the latter representing a decline, which officials said was a direct result of the state of the Jamaican economy and the impact of hurricanes.
But the decline in the cargo movement did not translate in a fall in earnings or profit at the listed company, which yesterday trade at 5.90, up nine cents, in the wake of the upbeat good 2005 numbers and the upbeat picture painted by Stephenson at the AGM.
For instance, the CEO under-lined last year's 22 per cent - $339.7 million -- increase in revenue to $1.87 billion and a rise in operating profit of $503.8 billion or 44 per cent. Net profit of approximately $315 million, up 29.7 per cent.
EXPANSION
Stephenson told shareholders that last year's growth in earnings was primarily attributable to the expansion of its stevedoring activities and its improved efficiency in handling cargo at the wharves -- a measure of productivity.
For example, Stephenson said, cargo loading and unloading improved by more than 100 per cent, to an average of 23 container moves per hour, against 11 per hour in 2004.
All this translated in a sharp decline in operating expenses. "We were able to reduce our direct operating expenses by 21 per cent," Stephenson said.
Upgrading the facility began in April and will continue through this year. This is expected to drive efficiencies, thus limiting the impact of the debt that is being taken on to finance the project. The company invested $300 million last year to upgrade facilities.
"The entire investment is commercial loans," Stephenson told Business Wednesday last night.
In an interview in the immediate aftermath of yesterday's share-holders meeting, Stephenson also disclosed that Kingston Wharves had signed agreements with two shipping lines to provide incremental business to his port, which will substantially boost income over the next several years. He declined to name the lines but said the operation had already started.
"This is going to be tran-shipment business that we are getting," he said. They would, he said, "provide about $5 billion in incremental revenue over a five year period".
Stephenson and his managers are banking on deals such as this to help counter the negative trends that emerged in a soft first quarter when revenue dipped three per cent to $458 million and net profit fell by 17 per cent, to $103 million, when compared to the corresponding period in 2005.
"From all indications things should be better for the second quarter ... even in the present challenging economic environment we firmly believe in Jamaica and remain very optimistic about the future prospects of trade and development."
KWL's new marketing thrust
Implementing strategies to improve internal and external communication
Increased level of promotion of the company's activities
Focusing on branding and positioning of the company
Targeted overseas clients
