Point Lisas increases profits ...but scraping return on investments

Point Lisas  Industrial Port Development Corporation Limited (PLIPDECO) is a public owned entity (51% owned by the Government of Trinidad and Tobago, 49% by private shareholders.) Other substantial shareholders are Trinidad and Tobago Unit Trust Corporation, Republic Bank of Trinidad and Tobago and Royal Bank Trust Company Limited.

The company’s five-year millenium plan for the period 2000 to 2004 focuses on continuing investment and expansion and aims for substantial increase in performance at financial, operational and infrastructural levels.  An increased provision of modern facilities and equipment are designed to attract the hefty advances in throughput, which the plan has targetted. The 2002 Financial Statements for the Corporation provides us with some information to assess the company’s ability to achieve its goals. The company has increased turnover by 6% from 2001.  The company’s profit after tax also increased by 14%.  Current assets for the group are at TT$49M, represented by TT$13M, receivables and prepayments of TT$30M, inventory of TT$4M and recoverable taxation of TT$1M.  This when matched with current liabilities of TT$46M provide an asset to liability ratio of 1:1 which will not suffer with the removal of inventory,

The total debt to equity ratio stands at 48%. The corporation should carefully consider any further borrowings for the company, in terms of the impact on its cash flow and the long-term effects for company.  The company has paid current portions of loans of TT$24M in 2002.  (This figure excludes existing loan amounts for which there are moratoriums on payments).  2003 loan payout amounts will exceed TT$24M since from June 1 2003, the company will have to pay semi annual amounts of US$1.1M, and monthly payments of US$385,200 become due from December 2003.  In 2004 monthly payments of US$139,296 are due from March 2004 and early in 2004 the company has to pay US$7.9M.   In the past PLIPDECO has refinanced loans and seems certain to maintain this trend. Return on Investments for the company is very low, that is low profitability for the corporation as a whole.  Using the calculation Profit after Tax / Total assets x 100, we calculate a Return of Investments (ROI)  of 3%. The ROI ratio is supported by the Net Sales to Net Asset position of 12% which tells that the company’s assets are generally underutilised in providing for turnover. 

To be fair these figures will have to be revisited at the 2004 year end when the Port is expected to run at higher utilisation rates. PLIPDECO has been working hard marketing itself . At a luncheon in Miami on March 13 2002, selling points focused on the proximity of Trinidad to South America and the need for a transshipment hub in the southern Caribbean.  The nation’s reliable work force, stable economy, and, by virtue of it being an exporter of methane gas, its inexhaustible energy supply — an attribute much larger island ports only wish they had.
PLIPDECO has a mammoth task ahead as it moves to achieve its vision  “to be recognised as the dominant regional leader and a global leader in the development and administration of efficient and profitable customer oriented ports and industrial estates.” The corporation will probably seek more joint ventures with other foreign investors and no doubt get a boost from its involvement in the creation and management of a US$60M port at Point Galeota mainly to handle vessels in the off shore oil industry.  The challenges will remain how to increase turnover and provide a greater return off the investments made thus far and to maintain the levels of debt at manageable levels.

The key elements of the plan and the progress to date are:

Port Point Lisas to handle a throughput of 150,000 TEU and 600,000 tonnes of general cargo by 2004.  The port has targetted import/export trade to achieve the targetted growth. The US$25M Berth 5 project, completed in December 2002 is critical for attaining this goal.  As at December 31st 2002 the Port had handled 95,100 TEUs. “Though this was a 16% increase over the 2001 figures, this fell short of our original target of 100,000 TEUs occasioned by the loss of Bernuth Lines during the year as a result of changing external market conditions” explains president Neil Rolingson.  The shortfall caused by this loss was met by the securing business with Maersk Sealand.
*Towage — Target is to achieve 100% of the towage business throughout the Gulf of Paria.  PLIPWJIS is the springboard for expansion.
* Industrial Estate — all remaining land (150 hectares at the launch of the plan) will be let at an average of 29 hectares per year to 2003.  Attention will be paid to the increased demand for warehousing space. “PLIPDECO is now seeking to establish greater strategic alliances with other organisations/ landowners in the greater Couva area with respect to making additional industrial sites available.  The Company has taken a concrete step in this direction by signing a Memorandum of Understanding with the new Estate Management and Business Development Company that has been charged with the responsibility of developing Caroni land.”

Maxine Attong is a financial and management consultant email: enhanceink@hotmail.com