Dennis Uy's shipping venture plunges to the red in first quarter

President Rodrigo Duterte issues the Certificate of Public Convenience and Necessity (CPCN) to the Mindanao Islamic Telephone Company Inc. (Mislatel) through its Chairman Dennis Uy during a ceremony at the Malacañan Palace on July 8, 2019. Also in the photo is Information and Communications Technology Secretary Gregorio Honasan II.

ALFRED FRIAS/PRESIDENTIAL PHOTO

Dennis Uy-led shipping firm got the first taste of a “challenging year” its chairman had feared, swinging to a net loss in the first three months with rougher seas potentially ahead.

In a disclosure to the local bourse on Tuesday, Chelsea Logistics and Infrastructure Holdings Corp. reported a net loss of P345 million from January to March, a reversal from P139 million net profits same period a year ago.

Chelsea is part of the Davao-based tycoon’s Udenna Corp., Uy’s holding firm, which last June 8 reported to have also plunge to the red and was bracing for 2020 as a “challenging year across all its businesses.”

“The COVID-19 (coronavirus disease-2019) pandemic has severely affected companies and people, and Chelsea is no exception,” C. Chryss Alfonsus Damuy, president and chief executive, said in a statement.

“The challenges will not disappear overnight and may likely persist into the next quarter,” he added.

Broken down, Chelsea attributed its stained balance sheet on flat revenues. The company’s logistics arm saw revenues decline by a tenth year-on-year to P118 million, while that of the shipping business barely grew at 2% to P1.48 billion.

Apart from the Taal Volcano eruption in January, logistics were severely hampered by movement restrictions during the enhanced community quarantine in Luzon that started March 17. With the current balance sheet only showing the impact of the first two weeks of lockdown, more pain is likely ahead as some form of restrictions remain in place.

In terms of shipping, Damuy said the typical demand during the “peak season” in the first quarter was also choked by quarantine controls. Under this segment, revenues from passage business rose 39% year-on-year to P413 million mainly due to recent business consolidation. Tugboat operations contributed P86 million, up 6% annually.

As a result, operating profit in the first quarter fell 90% year-on-year to P40 million from P381 million booked in the same period in 2019.

“We do remain confident that with our strategic plans to combat the crisis, and with our existing resources, capacity, fixed assets and strong market share, the Chelsea Group will spring back to recovery and move faster towards the 'new normal,’” Damuy said.

For 2020, revenues will get some support from two new vessels scheduled to be delivered later this year. Next year will see the completion of a 2.5-hectare “logistics warehouse” in the first quarter, while Chelsea’s unsolicited proposals to upgrade the Davao International Airport and Davao Sasa Port are also likely to benefit company performance as soon as the projects are finished.

The projects form part of the government’s “Build, Build, Build” infrastructure program and before the pandemic struck, were set to start building this year. “We are certain that our capital investments will bear fruit going forward,” Damuy said.

Shares in Chelsea fell 5.08% to close at P3.92 apiece on the stock exchange on Tuesday. By: Ian Nicolas Cigaral (Philstar.com)