Kingston Wharves Limited’s (KWL’s) bet on the transshipment business, which it entered earlier this year, has began to yield returns while, during the economic climate that the cargo handling firm still classifies as recessionary, domestic cargo handled at its nine berths are on the rise.

Revenue grew from $630 million during the three months to June 30, 2009 to $725 million during June quarter of 2010, which after expenses translated into opertaing profit of $168 million earned during the period under review, up from $159 million a year prior.

Moreover, a turnaround in finance cost from $61 million in the June 2009 quarter to income of $68 million in the review quarter lead KWL to net profit of $152 million, up from $21 million in the comparative period last year.

“The primary contributors to the increase in revenue were the 17 per cent increase in domestic containers handled and the 513 per cent increase in motor units as a consequence of the establishment of the transshipment hub,” said KWL’s report to shareholders accompanying the financial statements for the quarter under review.

KWL commenced operations of the motor unit transshipment hub for Höegh Autoliners in January 2010, while tonnage of 350,268 tonnes handled during the review quarter was 14 per cent higher than year-earlier levels.

The cargo handling firm says it is optimistic that changes in the operations of one of its warehouse and usage of its facilities by new shipping lines “will continue to offset the downturn in traditional lines of income”.

Terminal operations operating profit increased from $124 million to $157 million, or by 27 per cent, but the improvement in performance was in part due to rate increases implemented in the review quarter to recover higher operating costs.

Cold storage operating profit dropped by nearly 40 per cent to $16 million while security administration’s operating profit fell by 20 per cent to $9 million.

“HCS results were impacted by a contraction in the demand for cold storage, increased electricity cost, loss of a major customer who has established its own facitility,” said the company in its statement to shareholders.

KWL added that “the external factors that continue to concern us are utility costs, the uncertainty surrounding the exchange rate and the cost of finance”.

Even then, interest expenses dropped from $52 million to $31 million while foreign exchagne gains totaled $99 million in the June 2010 quarter compared to exchange losses of $8 million a year earlier, which largely accounted for the $131 million improvement in net profit during the quarter.