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With the corporation looking at loss
revenue of about S$300 million this
year on account of its hefty
discounts on port charges offered in
July this year and in view of the
rising competition posed by ports in
the region, notably Pelabuhan
Tanjung Pelepas, PSA Corporation has
lost the premium credit rating it
once enjoyed.
The credit outlook rating of PSA
Corporation, which last year
reported a lower revenue of S$2.95
million (and enjoyed AAA and AA1
rating), has been downgraded to
negative from stable by Moody's
Investors Service due to increased
pressure on its margins from tougher
competition as witnessed recently
with the migration of the
Singapore's ports two main
customers, Maersk Sealand and
Evergreen Line to PTP.
Although Moody's affirmed PSA's Aa1
long-term senior unsecured foreign
currency debt rating, the prospects
has been lowered as competition
intensifies including as shipping
lines seek to reduce costs in a
marketplace awash with capacity and
low freight rates.
"Moody's is particularly concerned
with the pressure facing shipping
companies with their focus on costs
as well as competition from
neighbouring ports will impose
increasing pressure on PSA's
operating margin," the agency said
in a release.
PSA, which lost the regional
transhipment business of Maersk
Sealand last year and lost Evergreen
to PTP in August this year,
initiated a series of massive
discounts and quickly re-negotiated
contracts with several Asian lines
that were known to have held
discussions with PTP.
PSA, which has been very rigid in
its contracts, was suddenly
receptive to dedicated berths and
flexibility on pricing in its
renegotiations with leading shipping
lines such as Hanjin Shipping and
Orient Overseas Container Line, both
of which have signed long-term
agreements in recent months.
According to Moody, it was concerned
over the discounts and their impact
on the terminal operator's margins,
which last year saw its profit
before tax drop 11.8 per cent to
S$1.0 billion.
The rating agency also noted that
the newly acquired overseas
businesses like Hesse Noord Natie in
Antwerp will not enjoy as high
operating margins as that of PSA's
core business. |
