Cargo Handlers cements higher pandemic profit
Published:Friday | December 31, 2021 | 12:09 AM
Port company Cargo Handlers Limited cemented higher profits in the year, despite the fallout from the cruise shipping sector which utilises its wharfing operations.
The company made $160 million in net profit, up 48 per cent from $108 million a year earlier, partly due to its investment in cement distribution. Earnings rose on the back of higher revenues, which climbed from $283.5 million to $337 million.
“There was increase in the net profit results at year end due in part to the company’s investment in Buying House Cement Limited,” Cargo Handlers said in a statement published with its audited results.
Its share of earnings from cement contributed $28.6 million to annual profit. Both Cargo Handlers and the Jamaica operations of Buying House are based in Montego Bay.
Cargo Handlers traditionally operates three business segments, including stevedoring, which involves the loading and unloading of cargo; leasing activities, in particular the leasing of trailers; and management services. Its major customers are Seaboard Freight & Shipping Jamaica Limited, Lannaman & Morris (Shipping) Limited, Bulk Liquid Carriers Petroleum Transport Limited, and CMA CGM Jamaica Limited.
In December 2020, Cargo Handlers acquired 42,000 shares, or 30 per cent, of Buying House Cement from South Quay LLC in a $105.2-million deal. Domicem, a company based in the Dominican Republic, holds the remaining 70 per cent of Buying House.
Buying House’s net assets were valued at $28.4 million at the time of purchase, with goodwill estimated at $76.7 million – which accounted for the gap between the asset value and purchase price.
In 2021, the net assets of the investment grew considerably, to $223 million, after investors added nearly $585 million in current assets, nearly one-third of which related to cash holdings.
Buying House held around 10 per cent of the local cement market a year ago. Caribbean Cement Company Limited, the maker and distributor of Carib Cement, dominates the market.
Cargo Handler’s higher revenue and profit came despite the fallout in cruise and petroleum transportation under the pandemic.
The company explained that with the disappearance of cruise ships to Jamaica, there was “no revenue or cost” during the year from stevedoring activities, specifically relating to cruise ships. It earned, however, from commercial cargo ships. Additionally, the company agreed with a petroleum transport-related party to suspend providing management services until such operations return to an acceptable level.
“Since the outbreak of COVID-19 in the first quarter of 2020, global financial markets have experienced [upheaval] and there are significant consequences for the global and local economies from travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty,” the company said, adding that the extent and duration of the impacts are still uncertain.