Dublin Port Trade Review

In 2018, volumes grew to 38.0m tonnes, an increase of 4.3% on the previous year.

Imports grew more strongly than exports during 2018 at 5.5% and 2.5% respectively. Dublin is primarily an import port feeding the domestic economy and during 2018, imports share of total tonnage increased from 59.2% to 59.9%.

Our business continues to be dominated by the unitised modes which together account for 81.5% of total throughput. At year end, both unitised modes were ahead, Ro-Ro by 2.7% and Lo-Lo by 3.8%.

The major part (56.5%) of our growth of 1.6m gross tonnes in 2018 came in the larger unitised modes. However, 2018 was a strong year for the non-unitised modes also.

Looked at in terms of units for Ro-Ro and TEUs for Lo-Lo, we saw growth of 4.0% in each of the modes.

Trade Vehicle volumes were 4.1% ahead in 2018. This is a strong performance given that first time vehicle registrations declined by 2.5% in 2018.

Within the Bulk sector, Bulk Liquid (which is virtually all petroleum products) increased by 7.9% while Bulk Solid increased by 16.8% driven, in the main, by large increases in imports of cereals and animal feeds during the year.

Last year was a disappointing year for tourist traffic with passenger numbers down by 1.0% and tourist vehicles by 1.2%.

We had a strong cruise season in 2018 with 23 more ship calls representing an 18.1% increase on the previous year.

Financial Performance in 2018

Dublin Port Company is an infrastructure provider with relatively little involvement in operational activities. As such, we have high operating leverage and expect to see volume increases directly driving revenue and profit levels.

During 2018, our 4.3% volume increase drove our revenues up by 5.7% from €85.5m to €90.4m.

Total operating costs in 2018 amounted to €43.6m representing a €2.7m (6.6%) increase on the previous year.

• Payroll costs were €1.1m higher reflecting pay escalation arising in 2018 together with an increase in the average number of persons employed from 148 to 163.
• Professional fees were €1.6m higher mainly as a result of expenditure relating to the MP2 project. The MP2 project is the second Strategic Infrastructure Development project to be brought forward under the Company’s Masterplan 2040. Expenditure in 2018 relates to work undertaken to prepare the planning application to be submitted to An Bord Pleanála.

Other operating income of €0.6m in 2018 relates to an increase in the value of the Company’s investment property “P5” located in Eastpoint Business Park. The comparable figure in 2017 was €1.9m made up of €1.6m for P5 and €0.3m from profits on disposal of fixed assets.

The Company’s operating profit increased by €0.9m (1.9%) from €46.5m in 2017 to €47.4m in 2018.

As an infrastructure provider with large imminent capital expenditure requirements, cash generation, Return on Capital Employed and net debt are key measures of our business strength.

EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) increased by €2.2m (4.1%) from €53.6m in 2017 to €55.8m in 2018. The calculation of EBITDA takes account of the deduction for the non-cash item related to the increased valuation in respect of the investment property P5.

Return on Capital Employed (ROCE) decreased from 12.0% in 2017 to 10.2% in 2018 reflecting the significant investment in fixed assets during the year.

Fixed Assets at year end totalled €496.6m compared to €418.2m at the end of 2017. The movement in Fixed Assets for the year is explained by additions of €87.4m together with an increase in valuation of the Company’s investment property amounting to €0.6m, offset by the depreciation charge for the year amounting to €9.5m.

At year end our net debt position was €91.6m compared to a €37.9m at the end of 2017 again reflecting the high level of capital expenditure arising in 2018.

Outlook for 2019

The most immediate challenge in 2019 is Brexit, with all its uncertainties. In preparation for this we are providing facilities on 7.8 hectares of port lands for State agencies including Customs and the Department of Agriculture, Food and the Marine. Depending on how Brexit unfolds, we may during 2019 need to provide even more facilities on a 3.6 hectare site in the Port.

During 2019, we will lodge a planning application for the MP2 Project with An Bord Pleanála. This is the second of three strategic infrastructure development projects which, between them, will deliver the vision of Masterplan 2040.

Growth is at such a rate that there is an urgency now to progress as rapidly as possible with the implementation of the ten year, €1 billion Masterplan capital programme. Immediately after we lodge the planning application for the MP2 Project we will turn our attention to designing the project to develop port lands on the Poolbeg Peninsula. This will include the construction of a Southern Port Access Route as an internal port road to provide access to and from the Dublin Port Tunnel for port traffic from the south side of the Port.

This year will be a decisive year in Dublin Port for our cruise business as we complete an economic cost benefit analysis study to determine whether we will proceed with the development of North Wall Quay Extension as part of the ABR Project. If we are to proceed, the project will need external financial support including from the cruise industry.

We have a well-developed capital investment programme with a sophisticated Project Management Office capable of delivering large capital projects on time and on budget. Crucial to the successful implementation of this plan will be completing our raising of €300m additional finance.

Dublin Port Company is self-financing and must develop the Port from within its own resources. Taking on large debt requires us to generate a commensurate level of profits. During 2019, we will review our port infrastructure charges and implement a pricing policy for the future which will enable the Company to meet the objective of Masterplan 2040 to provide port capacity for projected future growth to 2040 at which stage the Port will have reached full capacity.

Arguably the most significant development during 2019 will be the implementation of a Natural Capital policy to guide ecological projects which we will undertake in parallel with major construction projects with the objective of increasing biodiversity even as we build new Port infrastructure.

Eamonn O’Reilly

Chief Executive

29^th March 2019