Cargo Handlers gets into petrol
Stevedoring firm buys gas tanker company
CARGO Handlers Limited (CHL) will acquire a petrol tanker company aimed at diversifying its cargo operations and nearly doubling revenue to $300 million.
The acquisition of Bulk Liquid Carrier Petroleum Limited, which is owned by businessman Chester Chung, will result in the transfer of contracts with gas marketing firms Total, Rubis and Cool along with 14 tankers, according to CHL executive Mark Hart.
Investors should start seeing the returns from this aquisition starting January 1.
CHL advised that this investment is expected to add $150 million in revenue which virtually doubles the company's annual revenues at $157 million for the September 30 year-end.
"It will result in a significant growth in our revenues," said Hart. "We had an opportunity to expand the company and we have done our analysis and we think that...it is a natural synergy for us."
Currently, revenues are earned from stevedoring and baggage handling operations.
Baggage handling accounts for less than 10 per cent of revenue and net profit , according to financial notes.
The company's major customers are Seaboard Freight & Shipping Jamaica Limited and Lannaman & Morris (Shipping) Limited, which account for 72 per cent of revenues.
All other customers individually contribute to less than 10 per cent of total revenues, financials indicate.
The acquired company transports petrol across mostly western Jamaica and earns a profit, revealed Hart.
"We certainly are making a good investment which will offer a good return and increases our return on investment," he said. "On November 28 the board passed a resolution permitting us to do the investment and the deal is at the final stages."
CHL made $84 million in net profit for its September 30 year-end or 31 per cent higher than the previous year. The profit jump was due mainly to a one-off refurbishing of newly acquired hotel properties.
"There was some increase in domestic cargo with shipments handled by the company," said Hart. "[There were] several projects taking place on the North Coast specifically hotels being refurbished -- two or three of them were bought out. Some major refurbishing taking place along with other construction projects which had a positive effect on the cargo."
CHL had $136-million shareholders' equity with $130 million in working capital as at September 30, according to the company's latest financial statements.