By Theo van de Kletersteeg
Canadian Sailings has recently completed a study comparing financial and other performance data related to federally operated Canadian Ports from 2010 to 2011. The Ports of Toronto and Oshawa were not included in the study. Toronto was not included because its financial statements include the operations of Toronto Island Airport, and Oshawa was not included because Oshawa was not a Port Authority during the period covered. The study is meant to provide comparative data for the benefit of the management team of the various Ports, which may find actionable items among the data. It is our intention to publish additional annual studies in the future, and we invite you to contact us in the event that you have suggestions for improvement.
Total federal Port industry
In fiscal 2011, ACPA Ports produced aggregate revenues of $438.1 million, up 4.6 per cent from $418.9 million in fiscal 2010. Operating income of $118.6 million represented an increase of 7.7 per cent over fiscal 2010 aggregate operating income of $110.1 million. (ACPA Ports operate on the same fiscal year basis as other federal institutions, namely from April 1 to March 31).
By way of comparison, Statistics Canada reported that for the calendar year ended December 31, 2010, Canadian-controlled and foreign-controlled corporations doing business in Canada increased their revenues by 5.9 per cent during the year, to $3.2 trillion, and increased their operating profit during the year by 25.3 per cent to $293 billion.
What is the profile of a “typical” ACPA Port?
Of course, there is no “typical” ACPA Port because each Port is significantly different from the next, resulting from geographic location, size and economic opportunity. However, recognizing those limitations, a “typical” ACPA Port handled 18.8 million tonnes of cargo in 2011, up 5.9 per cent from 2010, producing revenues of $27.3 million, up 4.6 per cent from 2010, and an operating profit of $7.4 million, up 7.7 per cent from 2010. At $4.5 million, 2011 “comprehensive” income was 2.9 per cent greater than 2010’s $4.4 million. At $287,099, CEO pay was 11.1 per cent higher than in 2010. “Comprehensive” return on assets stood at 2.9 per cent in 2011, while “comprehensive” return on equity was 3.8 per cent. 2011 was a good year for almost all ACPA Ports.
Smallest and largest
Saguenay, the smallest in terms of tonnage, produced $135,000 of “comprehensive” net profits on revenues of $1.7 million in 2011. Its revenues per tonne of cargo, $5.45, was the highest, and enabled it to pay the highest employee cost per tonne of cargo, $2.22. By contrast, Vancouver, the largest in terms of tonnage, produced “comprehensive” net profits of $66.9 million on revenues of $182.5 million. Its revenues per tonne of $1.49 were 2 per cent above the nationwide average and at 24 cents per tonne, its employee cost per tonne of cargo was 27.3 per cent below the nationwide average.
Highest returns on assets and equity
In terms of “comprehensive return on equity”, Port of Sept-Îles was clearly at the top of the pack. However, this extremely high return was earned because of one-time financial gains, and not because of operational gains. Based on operational achievement, top marks went to Thunder Bay, Vancouver, Belledune and Trois-Rivières. In the end, Vancouver took the top spot in this category, with a comprehensive return on equity of 36.7 per cent, and a return on assets of 5.9 per cent, quite an achievement.
Highest and lowest revenue growth rates
With a revenue growth rate of 40.6 per cent, Port of Sept-Îles underwent the most robust growth of any Canadian federal Port, well above the national average of 4.6 per cent. Three Port Authorities were subject to declining revenues.
Employee cost to move one tonne of cargo
In 2011, employee cost to move one of cargo ranged from $0.05 (Sept-Îles) to $2.22, with the average being $0.33.
There were very significant differences between Ports in terms of income performance. In 2011, only two Ports produced negative operating income, versus three in 2010, and those represented relatively small amounts. Also, only two Ports produced negative “comprehensive” net income. The comprehensive loss by one was almost insignificant. However, Port of Montreal recorded a net comprehensive loss of $32.2 million. “Comprehensive” losses result mostly as a result of a re-evaluation of the value of the employer’s pension assets in relation to its pension obligations.
Only two Ports do not own an investment portfolio from which they derive investment income. Comparing 2011 to 2010, combined investment income declined from $7.3 million to $6.6 million. With investment income of $3.2 million, Port of Montreal generated the highest investment income, followed by Port of Thunder Bay ($965,000).
In 2011, the combined net capital expenditures of all federal Ports declined from $199.5 million to $156.5 million, representing an addition to the combined asset base of 6.2 per cent. Net capital expenditures do not include contributions made to capital expenditures by different levels of government.
Salaries, wages and benefits
During 2011, salaries, wages and benefits grew by an average rate of 2.5 per cent. However, on a per tonne basis, compensation declined by 3.2 per cent during 2011.
CEO pay and Board compensation
Average CEO pay rose by 11.1 per cent in 2011. When measured on a per tonne basis, CEO compensation rose by 5.0 per cent. During the period, average Port operating income rose by 7.7 per cent, and average comprehensive income growth rose by 2.9 per cent. Aggregate CEO compensation for all of the federal Ports in 2011 was $4,593,600, for an average of $287,100 per Port Authority. Lowest CEO compensation was $142,300, and the highest paid CEO earned $743,700. On average, CEO pay represented 1.0 per cent of Port Authority revenues and 1.5 cents per tonne of cargo handled. The highest year-over-year pay increase was 158.5 per cent, while at the other end of the spectrum, the deepest cut in CEO pay was 53.8 per cent. CEO compensation of four Port Authorities was reduced.
Surprisingly, total Board compensation in 2011 amounted to as much as 68.1 per cent of CEO compensation. Board compensation rose by 2.5 per cent in 2011.