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Philippines Freight Transport Report Q4 2009Published by: Business Monitor International Published: Aug. 26, 2009 - 63 Pages Table of Contents
AbstractPhilippine-owned port operator International Container Terminal Services Inc (ICTSI) in Mayannounced its financial results for Q109, revealing a 44% year-on-year (y-o-y) drop in net income. ICTSIrecorded net income of US$11mn as revenues over the quarter fell by 16% y-o-y to US$92.8mn. Thecompany attributed the decrease in its profit margin to the impact of lower global trade volumes as wellas the effect of the depreciation of the Philippine peso and Brazilian real, the currencies in which its corerevenue was received, against the US dollar. Despite the decline, however, ICTSI chairman Enrique K.Razon Jr said the results were ‘better than expected’ given the tough operating environment in which thecompany found itself. BMI notes that the steepest drop in revenue was recorded by the group’s EMEAoperations, which comprise of terminals managed in Poland, Georgia, Syria and Madagascar, incomefrom which fell by 42% y-o-y to US$13.93mn. BMI believes the effect of declining terminal activity hasbeen exacerbated by additional factors relating to recent major expansions to its global operations. BMI’s newly released Philippines Freight Transport Report notes that overall cargo volume in thecountry should grow by an annual average of 2.9% in the 2009-2013 period, down from 4.7% in thepreceding five years. Bearing in mind the impact of the global recession, the outlook for the Philippineseconomy over the next five years is for moderate to slow growth, averaging 3.3% per annum in 2009-2013. The effect is to give freight a reasonable platform for development, although companies will facegreater pressure on their margins than before. While in many developing economies freight growthusually exceeds GDP growth by a significant margin, the fact that we see it falling behind the widereconomy shows the extent to which the transport sector is failing to live up to its full potential. The air freight sector is expected to experience the most significant growth rate, averaging 4.3% y-o-y.This takes into account cooling demand in the sector. Next in importance will be rail freight, growing by4.0% from a low base as a result of the Northrail and Southrail projects. We see shipping growing by only1.5%, pulled down by the steep fall in foreign trade in 2009. One constraint facing the freight industry isthe environment in which it operates. Comparatively speaking, the Philippines’ BMI freight rating is alittle disappointing in comparison with regional peers, with an overall score of 47.4 (out of a potential100). Under most categories, the national industry received a medium to low score. Freight andinfrastructure growth rates, together with the transport intensity index (a measure of the dynamism offoreign trade) are all at the lower end of the scale. For the 2009-2013 forecast period, we expect the transport and communications sector to outpace theeconomy as a whole by a small margin, as far as value of output is concerned. It will achieve averageannual growth of 3.6%, versus 3.3% for overall GDP. Again, the gap between these two rates is narrowerthan experienced in many other emerging economies. The total value of transport and communicationsGDP will rise to US$17.8bn in nominal terms by 2013, representing 7.2% of the Philippines’ GDP. Get Full Details About This Report >> |
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