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 2012 to 2013. Port of Toronto was not included in the study because its financial statements include the operations of Toronto Island Airport, and are therefore not comparable to those of other ACPA ports.
In calendar year 2013, ACPA Ports produced aggregate revenues of $495.9 million, up 6.8 per cent from $464.3 million in 2012. Operating income of $143.4 million represented an increase of just under 1 per cent over 2012 aggregate operating income of $142.1 million.
By way of comparison, Statistics Canada reported that for the calendar year ended December 31, 2013, Canadian-controlled and foreign-controlled corporations doing business in Canada reported revenues of $3.49 trillion (up 3.6 per cent from $3.37 trillion in 2012) and operating profits of $311.5 billion (up 8.5 per cent from $287.1 in 2012).
What is the profile of a “typical” ACPA Port?
There is no “typical” ACPA Port because each port is significantly different from the next, resulting from geographic location, size and economic opportunity. Moreover, with Vancouver handing some 45 per cent of all Canadian federal Ports, and responsible for almost two thirds of the comprehensive income generated by all ACPA ports, Vancouver’s stats swamp everyone else’s. Recognizing those limitations, an “average” ACPA port handled 18.3 million tonnes of cargo in 2013, up 1.3 per cent from 2012, producing revenues of $29.2 million, up 6.8 per cent from 2012, and an operating profit of $8.4 million, up 0.9 per cent from 2012. At $10.7 million, 2013 “comprehensive” income topped 2012’s comprehensive income of $6.7 million by more than 60 per cent. At $296,063, CEO pay was 1.1 per cent higher than in 2012. “Comprehensive” return on assets stood at 5.9 per cent in 2013, up from 5.2 per cent in 2012. “Comprehensive” return on equity was 8.2 per cent in 2013, up from 7.0 per cent in 2012
If we were to exclude Vancouver’s numbers from the calculations, average tonnage handled by the remaining 17 Ports declined from 11.5 million tonnes in 2012 to 11.0 million tonnes in 2012.
Smallest and largest
Saguenay, the smallest in terms of tonnage, produced $663,100 of “comprehensive” net profits on revenues of $2.1 million in 2013. At $7.84, its revenues per tonne of cargo was the highest, and enabled it to afford the highest employee cost per tonne of cargo, $2.62. By contrast, Vancouver, the largest in terms of tonnage, produced “comprehensive” net profits of $92.9 million on revenues of $211 million. Its revenues per tonne of $1.56 were 2 per cent above the national average and at 25 cents per tonne, its employee cost per tonne of cargo was 49 per cent below the nationwide average.
Highest returns on assets and equity
In this category, top marks for the highest comprehensive return on equity went to Prince Rupert (21.8 per cent), Montreal (11.4 per cent), Sept-Îles (11.3 per cent), and Quebec (8.6 per cent). Top marks for the highest return on assets went to Prince Rupert (13.3 per cent), Montreal (8.2 per cent), and Vancouver (6.8 per cent).
Highest and lowest revenue growth rates
With a revenue growth rate of 15.9 per cent, Oshawa underwent the most robust growth of any Canadian federal Port, well above the national average of 6.8 per cent. Saguenay (15.1 per cent), Port Alberni (13.2 per cent) and Vancouver (11.8 per cent) also showed strong growth. Five Port Authorities reported declining revenues.
Employee cost to move one tonne of cargo, and “all-in” costs
In 2013, employee cost to move one of cargo ranged from $0.06 (Sept-Îles) to $2.62 (Saguenay), with the average being $0.37, up 7 per cent from 2012. The “all-in” cost of moving a tonne of cargo ranged from $0.19 (Sept-Îles) to $5.35 (Saguenay). The average “all-in” cost in 2013 was $1.01, down 12.9 per cent from 2012.
There were very significant differences between Ports in terms of income performance. While three Ports produced negative operating income in 2012, this number was reduced to two in 2013, and those same two Ports also produced negative “comprehensive” net income. Combined comprehensive income produced by all the Ports increased markedly from $113.6 million in 2012 to $182.4 million in 2013. Vancouver produced the highest comprehensive income ($92.9 million), followed by Montreal ($28.6 million), and Prince Rupert ($17.7 million). “Comprehensive” gains or losses are based on net income adjusted for a number of factors, with re-evaluation of the value of the employer’s pension assets in relation to its pension obligations being a major factor.
Revenue per tonne and operating income per tonne
Average revenue per tonne of cargo handled rose from $1.51 in 2012 to $1.59 in 2013.
Average operating income per tonne of cargo remained unchanged between 2012 and 2013 at $0.46/tonne. However, results for individual Port Authorities varied widely.
Whereas most Ports formally carry an “investments” account on their books, not all do. However, most Ports do carry substantial cash balances on their balance sheets which, to the extent that they represent cash not generally regarded as needed to conduct their operations, represent an investment. For each Port, we have made a subjective assessment of such “excess” cash, and classified it as “investment capital”. Generally, this amount was the greater of the amount labelled “investments” by the Port’s auditor, and the amount by which the cash on hand exceeded the cash needed to maintain a working capital ratio of 1.0. On that basis, investments of $273.2 million at the end of 2013 were down from $355.2 million at the end of 2012. Still, combined year-end 2013 investments represented 8.8 per cent of Ports’ total assets.
Comparing 2013 to 2012, aggregate investment income remained unchanged at $7.3 million. With investment income of $3.6 million, Port of Montreal generated by far the highest investment income, followed by Port of Thunder Bay ($685,900).
2013 was a year of high levels of capital expenditures. Whereas in 2012, aggregate net capital expenditures of all federal ports rose sharply from $156.5 million to $202.8 million, those amounts were relatively minor compared to $407.7 million spent on net capital expenditures in 2013. It should be noted that the reported capital expenditures are only those that, from an accounting point of view, were paid for or were the obligation of individual Port Authorities, and do not include capital expenditures paid for by way of grants or contributions from federal or provincial governments. The largest year-over-year increases in capital expenditures were made by Vancouver ($83.9 million), Sept-Îles ($62.5 million), and Prince Rupert ($44.6 million). The largest capital expenditures (relative to the size of its operations) were undertaken by Saguenay ($29.7 million in 2013 versus $$2.3 million in 2012).
Salaries, wages and benefits
During 2013, salaries, wages and benefits increased sharply by an average rate of 8.6 per cent, far greater than average compensation in Canada in 2013. On a per tonne basis, compensation rose by just over 7 per cent.
CEO pay and Board compensation
Average CEO pay rose by a modest 1.1 per cent in 2013 to $296,063. Aggregate CEO compensation for all of the federal Ports in the study in 2013 was $5,033,070. Lowest CEO compensation was $130,900, while the highest paid CEO earned $857,000.
Ports, like all other business organizations, are governed by a Board of Directors. At Canadian federal Ports, the smallest Board consisted of five members, while the largest consisted of fifteen. The average was eight. Aggregate Board compensation in 2013 amounted to 59.1 per cent of CEO compensation. Port of Oshawa reported the lowest Board compensation in 2013 ($41,400), while Vancouver’s Board reported the highest cost ($540,000) in 2013. In addition to Vancouver, Boards whose compensation exceeded $200,000 in 2013 included Sept-Îles, Montreal, Quebec and Prince Rupert.