KINGSTON Wharves Limited (KWL) is planning to spend US$100 million ($15.44 billion) over the next five years on a series of projects set to expand its business scope and propel its earnings even higher.

The logistics and terminal business had spent approximately US$60 million between 2022 and 2024 to rehabilitate its berth seven in order to handle Panamax-size vessels, acquire terminal equipment, and develop a 57,000-square-foot cold warehouse and 74,000-square-foot dry logistics facility on Ashenheim Road. These additions have been identified as the reasons for a 23 per cent rise in consolidated revenue from $7.90 billion to $9.71 billion between 2019 and 2023. Operating profit also increased by 28 per cent over the same time period, from $3.10 billion to $3.97 billion.

With an expected surge in future business for Jamaica, Kingston Wharves is planning to spend US$100 million to further develop its terminal and logistics divisions. The logistics division will see the construction of a western Jamaica warehouse and logistics complex and the development of phase two of Ashenheim Road, for which ground should be broken later this year.

“We’ve heard the cry of our business partners in western Jamaica that they long for a well-integrated facility with the expertise of ourselves and the business partners that we have [so] I’m here to share with you that Kingston Wharves will be establishing a warehouse and logistics facility in western Jamaica. More to come on that as we work through the details with our business partner. We’re very bullish about the possibilities in Jamaica over the next five years,” said KWL Chief Executive Officer Mark Williams at the company’s annual general meeting (AGM) held on June 5 at AC Hotel Kingston.

The company is set to open its phase one Ashenheim Road complex in six to eight weeks, which has been fully booked and with lease agreements signed with blue chip tenants.

Kingston Wharves will also be spending heavily on its terminal operations division, which will include rehabilitating berth six for Panamax-size vessels, constructing a mutlilevel car park to handle the increased transshipment of vehicles, acquiring more state-of-the-art port-handling equipment, and enhancing its climate change-adaptation capacity.

Kingston Wharves’ (company) debt-to-equity ratio jumped from eight to 20 per cent over 2022-2023 as it took on $5.12 billion in fresh debt to develop its facilities. As a result, the company’s debt balance currently stands at $7.17 billion relative to its equity of $35.42 billion. KWL was able to generate $3.76 billion in consolidated cash from operations during 2023 while paying a record $973 million in dividends. The company generates most of its business in United States dollars (USD).

“Typically, we’re open to all possibilities but we generally use bank loans so far. We’re taking a look at market, and what I’d want to advise shareholders is that we continue to use the best instrument that will allow us room to make these large amounts of investments. When you talk about the debt-to-equity ratio, there are certain covenants with our existing loan and what you’ll realise is that all of these investments are revenue-generating investments,” Williams responded on the strategy to fund its ambitious capital expenditure plans.

While KWL’s terminal operations revenue was flat at $1.64 billion for the first quarter, its logistics services business saw revenue climb by 35 per cent to $928.75 million as specialised logistics and warehousing operations, along with increased functionality and capacity, contributed to the growth in business. Williams keenly noted that the rehabilitation of berth seven should begin to become more noticeable later in the year on terminal revenue.

Gross profit improved by five per cent to $1.15 billion while operating profit totalled $872.83 million. Although profit before taxation grew to $838.06 million, consolidated net profit increased eight per cent to $746.23 million with net profit attributable to shareholders at $716 million. Earnings per share (EPS) for the quarter improved to $0.5008 while the trailing twelve-month EPS was $2.2227.

KWL’s total assets were up 36 per cent year over year to $58.72 billion, which was largely attributed to the 39 per cent rise in property, plant and equipment growing to $42.83 billion. KWL’s cash and short-term investments totalled $10.60 billion at the end of the quarter. Total liabilities and equity attributable to shareholders closed the period at $11.50 billion and $46.80 billion, respectively. This means KWL has a book value of $32.72.

KWL’s stock price closed Friday at $26, which leaves it down four per cent in 2024 with a market capitalisation of $37.19 billion. This also means that KWLhas a price-to-earnings ratio of 11.70 times and a price-to-book ratio of 0.79 times. KWL’s board also declared a $0.26 dividend on Wednesday totalling $371.85 million, to be paid on August 16 to shareholders on record as of July 18. This payment translates to a $159.18-million dividend for the Pan Jamaica Group which owns 42.80 per cent of KWL.

“We’re very optimistic about the future for Jamaica as a destination and certainly Kingston Wharves, with its experience in 3PL, that we expect that we’ll be seeing increased cargo movement through Kingston and, in particular, Kingston Wharves. The business development team is negotiating with a large regional player to actually have a large facility in Jamaica and hence, phase two of Ashenheim Road is coming,” Williams closed as he noted that there is 3.5-4 acres of land to begin phase two.