00:00I'm just wondering how you're assessing the impact of the Iran war on your business, on the terminals you run.
00:06Good morning, Eslinda. Always a pleasure to see you.
00:11It's extremely unfortunate you never, ever want to see anything like this.
00:16The immediate impact of the conflict on ICTSI specifically is on our container terminal in Umkazar in southern Iraq.
00:28Um, so far things there have been relatively quiet when compared to the rest of the Gulf region.
00:37Um, nevertheless, you know, we are, we are taking every, every precaution with our staff, with the terminal.
00:45And, and, and the, the number one priority right now is to ensure that everybody is safe and, and, um,
00:52and looked after.
00:56Uh, from the get-go, we've seen freight rates rising, insurance costs rising.
01:01Surely that translates to perhaps terminal pricing.
01:04What are you seeing? Are there initial signs that you're observing?
01:10Yeah, certainly. I mean, with the, with the Strait of Hormuz closed, um, is the, the issues that will then
01:17spill over into, to the Red Sea.
01:19I know a lot of shipping lines have already said they'll be going around the Cape as opposed to, to
01:24traversing the, the, um, uh, the Suez Canal.
01:28Um, you, you, you will inevitably see freight rates rise, um, obviously with the conflict insurance, insurance costs will go
01:37up.
01:37But there is a major inflationary effect as well, driven by, by oil prices.
01:43And so there, there is going to be a need from, from our side to certainly look at, at our
01:49pricing, where we're able to, to adjust that.
01:52Um, many of the concessions we have, um, have firm regulations around where and how you, you increase rates.
02:00But in other areas where we're more free to, to negotiate these on an ad hoc basis, we'll certainly, um,
02:09do so and look into it.
02:13And Chris, what, what percentage of the global throughput, your global throughput is linked to the Middle East?
02:21Uh, between two and three percent, depending on, depending on how consumption is going in, in Iraq.
02:28Um, when you then translate that into, into EBITDA, uh, you know, we're, we're obviously looking at having a significant
02:36amount of fixed costs at our site in Umcasar to make sure that, that, uh, the team is safe down
02:43there.
02:43I'd say the impact would be somewhere closer to between three and four percent.
02:52Uh, our developments that we're seeing right now impacting your CapEx.
02:56We know that you want to spend $740 million first.
03:02Where, how, secondly, uh, how will you fund that?
03:08Um, we've been, we've been, we've been very successful over the last few years of, uh, in, in, in, in
03:15generating substantial cash flow.
03:16Um, over the last five years, our volumes have increased by 42%.
03:21Earnings have grown 3.7x.
03:23So, quite, quite, um, quite a positive, um, relationship there between the two.
03:29Um, we, we, we have been very successful in deploying capital into terminals we already operate where we see a
03:38demand for, for more of what we're providing.
03:41Um, so we will spend about 90% of that, that number on expansion of existing facilities to, you know,
03:51to either boost our offering or to, to try to attract more market share in, in, in, in the more
03:57competitive terminals.
03:59So, you know, off the top of my head, two in Latin America, where you would be, uh, embarking on
04:07new expansions would be Ecuador and, and in Honduras.
04:10We will continue to expand our terminal in Mexico where, you know, our, our capital spends over the last few
04:16years have translated to the very, very high pickup of market share.
04:20Uh, we'll also continue to do the same thing in Melbourne, in Australia.
04:24We have a couple of projects in, in the Philippines.
04:28One is the expansion of our Manila terminal.
04:31And another one is a completely new build, uh, south of, of Manila and Batangas, which we, we expect to
04:38be a, expect to be a game changer for the market here.
04:42Get some of the, uh, container trade outside of, of Metro Manila to decongest the city a bit and, and,
04:50and allow us to, to give multiple options to our, our shipping line partners who, who ship in and out
04:57of the Philippines.
05:00So, big expansion plans, Chris, in terms of MNAs, what's in the pipeline?
05:05You've talked before about wanting deals in Southeast Asia, in Africa.
05:09Where are you with that?
05:11Are you in talks currently?
05:13Um, well, fortunately we'd, we've been able to, in the last six months, close a couple of deals, um, specifically
05:20in Southeast Asia and Batam, just across, uh, across from Singapore, um, in Indonesia.
05:27And, uh, in, uh, Durban, South Africa, which is the, um, largest gateway terminal on the continent and the largest
05:35container terminal in Southern Africa.
05:37Um, so two very exciting projects that, um, we're, we're, we're just starting, um, and we, you know, we've, we've
05:45hit the ground running, particularly in, in, in Durban, where we started on the 1st of January.
05:51Um, and things are looking very, very exciting.
05:54Obviously it's, it's, it's, it's a large, it's a large project, so we need to take it step by step.
05:59Um, but there is a lot of low hanging fruit and, and, and we hope, um, you know, we hope
06:04to, to turn that into an ICTSI type project sooner rather than later.
06:10We're continuing to look across multiple regions, Latin America's always a, um, a very, very interesting market for us, West
06:19and East Africa, um, and Southeast Asia, as you, as you mentioned.
06:24The Middle East, of course, is, is a bit complicated at the moment, but, you know, hopefully, um, things settle
06:30down there, um, and, you know, we can go back to normal as far as, as far as the container
06:36trade and, and terminal operations in that part of the world.
06:41As, as, as you said, the Middle East is looking pretty complicated, but we're also seeing hotspots around the world,
06:47geopolitics front and center, increasingly an issue for businesses.
06:52Is that shaping your M&A plans, where you expand in any way?
06:58Um, I, I, look, I think in, in, in the markets that we prefer to be in, there's always an
07:05inherent risk.
07:05Um, and, you know, we will, regardless of that, continue to explore opportunities everywhere.
07:13Um, and, and, and I think that's part of the value that we bring, um, you know, a lot, a
07:19lot of these markets require significant infrastructure investment, particularly foreign investment, um, in and around, um, critical infrastructure.
07:28And, and, and, and we're, we're always prepared to, to be the first mover in that sense.
07:33So, we will continue to, continue to look and where the opportunities arise, continue to be aggressive.
07:42Chris, congratulations are in order.
07:43I mean, the numbers for 2025, very strong.
07:46Can you beat that?
07:47What will it take?
07:50Thanks very much.
07:51Um, I, I think we certainly have the team to do it.
07:54Um, and, and I certainly think that there is still room to improve on these numbers.
08:00Um, that being said, we, we always take a, a pragmatic approach and, and, uh, rely on our agility to,
08:08to take advantage of opportunities when they come.
08:11So, I think I've sufficiently dodged your question.
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