Pakistan International Container

Pakistan International Container (PSX: PICT) was set up as a private limited company. The company provides container terminal management services. It is a subsidiary of ICTSI Mauritius Limited; the ultimate parent company is International Container Terminal Services Inc.

Shareholding pattern

As at December 31, 2020, nearly 84 percent of the shares of the company are held under the associated companies, undertakings and related parties. Of this, a major shareholder is ICTSI Mauritius Limited, holding 48 percent shares. Close to 13 percent shares are owned by foreign companies, while the shareholding of directors, CEO, their spouses and children is negligible. The remaining 3 percent shares are with the rest of the shareholder categories.

Historical operational performance

The topline of Pakistan International Container has been fluctuating over the years, while profit margins have remained more or less stable.

During CY17, revenue was nearly flat year on year, declining by less than 1 percent. The country’s economy during CY17 was uncertain, while conducting business was challenging due to vessel upsizing, consolidation of shipping lines, transporters’ strikes, etc. During the period, the company handled 525,653 containers- a decline by 8 percent. This was due to the transporters’ strike in the second quarter resulting in congestion at Karachi port. However, revenue remained more or less unchanged due to increase in storage revenue. Cost of services increased marginally to 51 percent of revenue, keeping gross margins nearly flat at close to 49 percent. But with finance expense nearly disappearing from Rs 47 million in CY16, to Rs 8 million in CY17, net margin picked up slightly to 30 percent, compared to 29.6 percent in the preceding year.

CY18 saw an 11 percent drop in revenue. Economic situation continued to remain uncertain with the general elections, exchange rate fluctuations and depleting foreign exchange reserves. During the year, the company handled 427,118 containers, a decline by 18 percent. The container terminals at Karachi Port were underutilized due to low trade activity. This also resulted in an increase in cost of service, that further escalated due to the inflationary pressures within the economy. Thus, gross margin was recorded at a lower 45 percent for the year. Along with administrative expenses also making a larger share of revenue compared to that in the previous year, the lower gross margin also reflected in the bottomline; net margin stood at nearly 26 percent for the year.

Revenue contracted for the third consecutive time in CY19, by nearly 4 percent. Economic slow down remained during the period, with a high inflation rate interest rate, and rupee devaluation. Trade activity was also low at Karachi Port due to a decline in import volumes, without a noticeable rise in export volumes. The company handled 366,347 containers during the year. With lower container volumes and inflationary pressures, cost of services made a larger share in revenue, at over 56 percent. As a result, gross margin also reduced to 43.6 percent. Despite this, net margin grew to almost 27 percent due to some support coming from other income and a nil finance expense.

Unlike several other companies that witnessed a decline in their toplines during CY20 due to the Covid-19 pandemic resulting in a lock down bringing business and trade activities to an abrupt halt, Pakistan International Container saw a growth in its revenue by 13.6 percent. It handled 394,458 containers during the period. Cost of services also made a relatively lesser share in revenue at 54 percent, allowing gross margin to incline to 45.7 percent. With further support coming from other income that was largely sourced from markup on savings accounts, net margin also improved to nearly 30 percent for the year.

Quarterly results and future outlook

The first quarter of CY21 saw revenue higher by 31 percent year on year. While the first quarter of CY20 saw the pandemic entering the country towards the end, the first quarter of CY21 saw the ongoing third wave of Covid-19 pandemic, along with the roll out of vaccination drives. With some resumption in business activities, the company saw higher volume of containers handled, at 128,688, compared to 102,180 containers in 1QCY20. The volume handled by the overall container market of the country also saw an 11 percent rise. On the other hand, cost of services was lower at 51 percent of revenue in 1QCY21, compared to nearly 55 percent in the same period last year. Therefore, profit margins also improved with bottomline for 1QCY21 recorded at nearly Rs 1 billion.

Although vaccination drives have begun in several countries of the world, and business activities have also resumed, the global economy continues to face the adverse effects of the existent pandemic. As per the company’s report for the period, the “World Trade Organization expects 8 percent rise in world merchandise trade” but the effects of pandemic would continue to exist, and trade will remain lower than the pre-pandemic level.