KINGSTON Wharves recorded a 43.5 per cent year-on-year decline in net profit during its 2011 financial year.

The cargo handler posted $345.6 million in net profit for the 12 months to December 31, 2011, down $266 million from the $611.6 million it showed for 2010.

The company recorded slightly higher revenue — $3.17 billion compared with $3.02 billion in 2010 — but its bottom line was hurt by declining cargo volumes due to the weak state of the Jamaican economy.

In its financial statements, Kingston Wharves’ CEO, Grantley Stephenson, said that profit was also affected by rising utility and maintenance costs.

Cost of sales rose by 21 per cent, from $1.59 billion to $1.93 billion, while administrative expenses increased by 17.2 per cent from $582.1 million to $683.4 million.

Aside from its core business — handling cargo at the port — the firm’s cold storage and security administration operations both saw declines in operating profit.

Its security business was primarily affected by an increase in industry rates paid to guards, while Stephenson said the company is exploring ways to generate additional revenue and reduce cost at its cold storage operations.

Kingston Wharves expects that the implementation of recommendations derived from an energy audit conducted in 2011 will result in lower electricity cost.

In preparation for the completion of the Panama Canal expansion — scheduled for 2014 — the cargo handler has already commenced the expansion of its container handling equipment fleet and has plans to continue its rehabilitation of the berths and relocated warehouses.

Jamaica Producers Group (JP) has offered to buy a 25 per cent stake in the cargo handler for $1.8 billion, which would be used to finance expansion plans.

The expansion project will involve the demolition of two to three warehouses (to be relocated) and dredging to accommodate larger vessels at berths five through seven.