October 19, 2015 1:00 pm JST
International Container Terminal Services
Chairman makes global growth top priority for port operator
MINORU SATAKE, Nikkei staff writer
ICTSI, which operates a cargo terminal in the Manila port, is looking to expand its international presence.
MANILA -- Chairman Enrique Razon is looking to catapult Philippine port operator International Container Terminal Services into the ranks of global players and double sales within just five years.
Razon's game plan includes building ports in Africa and Latin America, as well as a possible expansion into Greece and Iran.
ICTSI's flagship Manila International Container Terminal is a key facility in the Philippine capital's port.
Located in an area surrounded by slums, the 94-hectare terminal is equipped with state-of-the-art port machinery, including 14 large cranes. It can handle 2.6 million TEUs, or twenty-foot equivalent units, of cargo, per year. This puts it nearly on a par with Japan's Yokohama and Kobe ports in terms of cargo-handling capacity.
ICTSI is currently building ports in four locations, including in Mexico and Colombia. The company is also exploring business opportunities in Greece and Iran.
These moves are part of a growth strategy focused on expansion in emerging countries.
ICTSI, which operates 30 ports in 20 countries, racked up $1.1 billion in sales in 2014. Razon wants to raise that figure to $2.2 billion in 2019.
Climbing the ladder
The port operator traces its roots to a cargo-loading business launched at the Manila port in the 1930s by Razon's grandfather, who had immigrated from Spain. Razon's father inherited the business and turned it into ICTSI in 1987. In addition to Manila, the company operates terminals at other major Philippine ports, including Subic.
But despite controlling an overwhelming share of the domestic market, ICTSI is not yet on the same level as global giants like Hutchison Port Holdings of Hong Kong and PSA of Singapore.
Since he took the helm at ICTSI in 1995, Razon has been pursuing aggressive international expansion.
In addition to building ports in six Spanish-speaking Latin American countries, including Mexico, Razon is also betting big on the potential of African countries, starting operations in Congo, Nigeria and Madagascar. Africa, he says, still has much room for growth and development.
At age 17, Razon dropped out of school and joined his father's company. He started out as a crane operator loading and unloading containers. This meant climbing up a high ladder under the scorching sun and working in a hot cockpit for hours, but Razon said he enjoyed the work even more than his current job as a chairman.
When he was around 20, Razon spent a few years supervising a workforce of 2,000 Filipino at a port in Saudi Arabia.
But Razon's confidence in his abilities to run ICTSI does not come from his on-the-ground experience alone. He said he is also proud of how he steered his company through the Asian financial crisis in the late 1990s.
Faced with a mountain of debt, Razon was forced to sell eight port terminals in Mexico, Pakistan and other countries to CK Hutchison Holdings, a Hong Kong conglomerate.
After surviving the financial crisis, ICTSI paid down its debt significantly and switched to making settlements in dollars. The company has since been expanding steadily but cautiously overseas.
Razon is now trying to build up casino operations as a new revenue source. In 2013, the company opened Solaire Resort and Casino, a huge entertainment complex in the Manila port. It has also acquired a small casino in South Korea's Jeju Island, as well as two small islands in the Incheon Free Economic Zone.
The casino business fits in well with Razon's business strategy because, like port facilities, it involves large-scale operations. It also gives him a chance to take advantage of his personal contacts in the Philippine government, which is seeking to develop a vast casino resort in the Manila Bay area, and the country's business community.
Razon, always on the lookout for new opportunities, said he is confident his company can adapt to the business environment of any country. And confidence and adaptability are exactly what ICTSI will need to become one of the world's top players in its field.
October 10, 2015 12:05 am JST
International Container Terminal Services
More port contracts to offset weak trade growth
CLIFF VENZON, Nikkei staff writer
MANILA -- International Container Terminal Services (ICTSI) expects to double revenues in the next five years by taking on more port terminals abroad to insulate the company from faltering growth in global trade.
A leading Philippine company, ICTSI runs 30 ports in 20 countries and breached $1 billion in revenues for the first time in 2014. "We hope to double our size in the next five years in terms of revenue," Enrique Razon, ICTSI's chairman and president, told the Nikkei Asian Review on Friday.
Razon has set this ambitious target at a time when international trade is weakening. The World Trade Organization on Sept. 30 trimmed its 2015 forecast for volume growth in world merchandise trade to 2.8% from 3.3% due to the slowdown in China, which remains the world's largest exporter.
"The target is not based on the growth of global trade, [but] on new terminals coming on line," said Razon. "We have grown in the last three or four years despite global trade hardly growing."
ICTSI's gross revenues from port operations, such as cargo handling, have expanded by on average 20% over the last five years while global merchandise trade only averaged 9%, according to data from the United Nations Conference on Trade and Development.
ICTSI has expanded in that time by taking over ports that were offered for privatization. The company has also taken on green field projects, and new terminals are under construction in Colombia, Mexico and Nigeria.
The company is reviewing possibilities in Iran, and has participated in contract auctions in Africa and Greece.
"Africa is a challenging place, but the growth rate is higher because it comes from a lower base," said Razon. "It's an environment that not many people can adapt to, so Africa is now a focus."
Razon believes ICTSI's two decades managing ports in diverse markets gives it a vital advantage.
MANILA -- International Container Terminal Services is giving up its Japanese operations as the Philippine port operator looks for more growth elsewhere.
International Container Terminal Services on Tuesday said it sold back its 60% stake in Naha International Container Terminal to the company for 105.3 million yen ($884,400). The sale leaves six Japanese harbor transportation companies owning the Naha International Container Terminal.
Naha International Container Terminal holds a 10-year lease from the Naha Port Authority to operate a terminal in Okinawa, Japan's southernmost prefecture. The contract will lapse by the end of this year, but extension talks are to start soon. Still, "ICTSI is no longer interested in participating in the ... negotiations," the company told the Philippine Stock Exchange.
ICTSI did not elaborate on the move, and company representatives were not immediately available for comment.
The Naha operation makes up only 0.066% of ICTSI's total assets.
In its 2014 financial report, ICTSI said the Naha terminal does not have a stevedoring license, which Japan only issues to domestic companies. Hence, its revenue stream is limited to fees from wharfage and other ancillary services.
The sale comes with ICTSI moving into faster-growing markets. Chairman Enrique Razon earlier said his company was bidding for terminals in Cameroon and Kenya. It already has concessions in Democratic Republic of Congo, Madagascar and Nigeria.
The company, which operates 29 mostly midsize origin and destination ports in around 20 countries, has been withdrawing from underperforming ports.
ICTSI last year canceled a contract in India after it deemed the business "had no effect on (its) global operations." In 2012, it pulled out of Syria due to the civil war there.
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