We marked a key milestone in 2016 as we reorganised the Company’s structure and rejuvenated our internal operating procedures and processes, so as to ride the wave of recovery in Indonesian economy and better position ourselves to capitalise on the opportunities that will arise.
As a Company, we recorded revenue of USD406.4 million in 2016, compared to USD451.1 million in 2015. The decline of 9.9% was mainly due to lower revenue contribution from Samudera Shipping. In line with the lower revenue, cost of services fell 10.3% to USD343.9 million, compared to USD383.7 million in 2015.
Nevertheless, the Company’s Net Profit rose 51.3%, increase to USD12.3 million in 2016, compared to USD8.1 million in 2015. Contributing to this was the positive performance from our Samudera Terminal, Samudera Agencies and Samudera Logistics businesses. In addition, the Company also recorded insurance claims of USD2.3 million mainly in relation to a vessel that was grounded and subsequently written off in 2012 following sustained damage, and a tax benefit arising from the successful restructuring and revaluation of our Terminals.
As Samudera Indonesia’s largest revenue contributor, Samudera Shipping generated USD264.7 million in revenue in 2016, a 16.6% decline compared to USD317.5 million in 2015. Revenue was weighed down by lower container freight rates and weak dry-bulk charter rates, along with the operation of a smaller bulk & tanker fleet during the year. Samudera Shipping also deemed it prudent to make a provision of USD3.0 million for bad debt, mainly in relation to the bankruptcy of Hanjin Shipping, with whom it had cooperated on slot exchange arrangements for various services in the region.
Amid these challenging industry conditions, Samudera Shipping partnered other industry partners through slot exchanges and other arrangements to preserve its market position in the Asian region. Beyond that, it also actively laid the groundwork for alternative income streams during the year, through partnerships with overseas players to operate domestic shipping services in markets such as India, Thailand and the Middle East. At the same time, it continued to its efforts to maximise vessel utilisation and operational efficiencies.
In 2016, we took the strategic step of establishing PT Samudera Terminal Indonesia, a new holding company for our five subsidiaries providing port and terminal services. We believe that the reorganisation will enable us to tap greater economies of scale to create greater value for our shareholders. Amid the restructuring activity, we managed to achieve a 12.4% improvement in revenue to USD65.6 million in 2016, compared to USD58.4 million in 2015. This was mainly due to a growth in volume handled at our domestic and international terminals. Taking into account a tax benefit of USD11.6 million and tax expenses of USD1.5 million arising from the asset revaluations of three terminal entities, net profit for the terminal business rose to USD20.7 million, compared to USD6.6 million in 2016.
For Samudera Agencies, lower import and export activity amid weak global economic conditions led to a decline in revenue to USD18.8 million in 2016, from USD19.3 million in 2015. In spite of this, we recorded an increment in net profit to USD4.6 million, compared to USD 3.9 million in 2015, due to improvement in account receivable collections.
Revenue for Samudera Logistics improved to USD70.2 million, from USD67.8 million a year ago, reflecting the rate increments implemented at our depot container and trucking business, as well as increased third-party logistics activity. Net profit, however, fell to USD3.4 million in 2016, compared to USD5.5 million in 2015, due to write-offs of accounts receivables from the trucking and project logistics business, along with expenses incurred in conjunction with the shutting down of a subsidiary in Dubai.
Further to our restructuring effort, we established a new business line, Samudera Property, to consolidate the management of our land bank and investment properties, as well as undertake future property development initiatives. The business line recorded revenue of USD1.9 million in 2016, compared to USD1.6 million in 2015, in view of higher occupancy for Samudera Indonesia Building and higher rental rates achieved from Samudera Logistics Centre in Belawan during the year.
Prospects and Outlook
We are reasonably confident about our prospects in the current year.
Operating conditions in the shipping industry are expected to remain challenging, amid a prolonged supply-demand imbalance situation. Competition in the market, especially in the region, is expected to remain intense. Our Shipping business will continue to capitalise on growth opportunities in Asian markets to strengthen their position and competitiveness in regional container shipping. In the meantime, we will continue to look at ways to better equip ourselves to tap the growth potential in the Indonesia domestic shipping market to complement our existing business there.
The restructuring of the Samudera Terminal business line has given rise to a more efficient and organised entity, and paves the way for us to expand our port and terminal operation. We are now in a better position to initiate the improvement in the quality and productivity levels at our terminal operations. We will also pursue strategic initiatives for growth, including expanding our port operations and acquiring new ports should such opportunities arise.
In a similar vein, the incorporation of PT Samudera Agencies Indonesia to focus on providing in the shipping agency services will allow for streamlined expansion, as we leverage our reputation as an established and reliable shipping agency expand our agency network. In this regard, we intend to open branch offices in parts of Indonesia that we currently do not have a presence, to enable our principals and customers to have a greater reach within the country.
We are positive about the prospects of our Logistics business. Going forward, we expect to deploy more resources in warehouses, distribution centres, container depots and centres and land transportation vehicles, to grow this business. In the current year, we will also be restructuring this Logistics business so as to achieve greater cost and operational efficiencies, and position ourselves to grow our market share in a sustainable manner.
The Property business is newly created as a result of the restructuring, and remains a small part of our revenue contribution pie. Nevertheless, we remain on the lookout for potential land parcels and properties for development and investment.
Appreciation and Closing
The Board of Directors and all our management are grateful to our employees for their unwavering commitment and ceaseless drive to overcome challenges and performing to the best of their abilities.
We would also like to extend our sincere appreciation to our customers, business partners, the government, regulators and all our other stakeholders for the support and partnership shown to us.