KGLI-NM, key investor of Negros Navigation (Nenaco), is going against the grain and sticking to its expansion plans despite the global economic crisis.
KGLI-NM said its mother unit, Kuwait-based KGL Investment, is still upbeat about Philippine prospects.
In an interview, KGLI-NM and Nenaco chair Sulficio Tagud said while the company anticipates 2009 to be a difficult year, the conditions do not warrant a restructuring of investments like what other international players are doing.
“Our foreign partners are long-term investors and they are willing to wait,” Tagud pointed out, adding that the effects of the crisis are not bad as expected on the local shipping industry.
“Even in the wake of the global financial crisis, they are not alarmed over their investments here and in fact will maintain them,” he added.
“While we expect volume to drag by about 10-20%, the favorable cost of fuel will somehow offset the lower volume.”
Nenaco is undergoing refleeting and has earmarked $20 million to acquire two dedicated freighters to boost cargo capacity.
Last month, the liner already received the first of the two freighters. In August, it also acquired an 18-year-old, 250-TEU vessel from Germany.
Once the refleeting is complete, the additional bottom will raise Nenaco’s cargo capacity by 10%. This is in turn expected to jack up market share by up to 20% from the current 10%.
Nenaco operates four roll on-roll off/passenger vessels, down from seven in 2004. The three vessels were sold to cover debts.
With the additional vessels, Nenaco would once again operate seven vessels—four combo and three dedicated cargo carriers.
Volatility in fuel prices and vessel underutilization are expected to clip 2008 net income growth by P100 million to P120 million. In 2007, net income amounted to P298 million.
Under a 10-year court-guided rehabilitation plan, Nenaco has P1.8 billion in debts to date. It has until 2014 to complete payments. Mother firm KGLI-NM has agreed to shoulder P1.4 billion that will be converted into equity. The other P400 million will come from proceeds of operations.
