2GO hikes spending budget to P850M in 2015

MANILA, Philippines – Listed transport solutions firm 2GO Group, Incorporated increased by more than half its capital spending budget for the year to modernize its 28-year-old fleet and retrofit its warehouses.

2GO president and Chief Executive Officer Sulficio Tagud Jr said on the sidelines of an annual stockholders’ meeting last week that the company has earmarked P850 million ($18.79 million) capital expenditures (capex) for 2015 –60% coming from bank loans, and the rest from internally generated funds.

About P700 million ($15.48) of this year’s capex will be used to acquire one roll-on roll-off (RoRo) vessel and two fast ferries, and the remaining P150 million ($3.32 million) for warehouse retrofitting and equipment.

Last year, the capex was P550 million ($12.16 million), which was used to buy one shipping vessel and equipment.

“Shipping will continue to grow. We expect that to grow by 5% to 6% in terms of revenue,” Tagud said.

2GO has 3 core business units: 2GO Freight, which handles commercial and personal shipping needs; 2GO Travel, which integrates passenger ships and fast ferries through land and sea multimodal transport linkages; as well as 2GO Supply Chain, which handles logistics, distribution, warehousing, and inventory management, the company told the Philippine Stock Exchange.

“We’re positioning ourselves in support of those expansion in retail operations,” Tagud said. He added, “We are also talking to potential partners in e-commerce.”

Improve net income by a quarter

The transport solutions provider currently has 8 RoRo vessels, 7 cargo ships, and 8 fast ferries.

2GO will not buy new ships with a capacity of more than 300 twenty-foot equivalent unit because of “considerations on [domestic] port conditions.” The capacity of its vessels will also be maintained at 1,500 passengers and 170 to 180 containers.

2GO expects to take delivery of the new vessels within the second half, and to start using them by the second quarter of 2016.

The company expects to increase its profit by a quarter this year as it sees positive performance on logistics, distribution, and express courier businesses, a company official said.

2GO has set a P1.1-billion ($24.31 million) net profit target this year, 25% up from P880 million ($19.45 million) last year, Tagud said.

It expects revenues to hit P16 billion ($353.74 million) this year, from P14 billion ($309.52 million) last year, he said. – Rappler.com

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