LUKA KOPER, d.d., Koper
Summary of the Business plan for 2020 and estimate of business performance in 2019 and Strategic Business Plan 2020–2025
On the basis of the Rules of Ljubljana Stock Exchange and the Financial Instruments Market Act RS the company hereby the Summary of the Business plan for 2020 and estimate of business performance in 2019 and Strategic Business Plan 2020–2025.
At its 25th regular meeting held on 13 December 2019, the supervisory board of the company Luka Koper, d.d. granted its approval to the Business Plan of the company Luka Koper, d.d. and the Luka Koper Group for 2020 and to the Strategic Business Plan of the company Luka Koper, d.d. for 2020–2025.
In 2020, the Luka Koper Group plans to increase its net sales revenue by four percent. Maritime throughput is also expected to increase by 23.4 million tons by the end of 2019, up by three percent. Growth is expected in all commodity groups except liquid cargoes. The goals stated above will be achieved by increasing the sales of company services based on increased and improved company and hinterland infrastructure capacities, vigorous commercial activity and the reorganisation of work processes.
The net sales revenue of the Luka Koper Group for 2019 is estimated at EUR 228.5 million, which is 1 percent more than in 2018 and 6 percent less than planned. The Group's net profit is estimated to reach EUR 39.4 million, exceeding the plan by 3%. Operating profit will be at the planned level and will reach EUR 44.2 million.
The Group will close the business year 2019 with 30 percent more employees than the year before, as a result of the implementation of the Port Services Implementation Strategy, which envisaged a three-pillar system: direct employment, hiring of workers through agencies, and cooperation with external contractors. “Increasing the number of employees by almost a third is a great undertaking for any company, and in the case of the Port of Koper, in the implementation of the strategy for the provision of port services, we have to add agency workers, namely 346 persons envisaged in the second pillar who will be joining the Port of Koper employees by the end of this year. There is also a third pillar, i.e. cooperation with external contractors, which is gradually being implemented and will be completed in early 2020. With it, we shall finally say goodbye to the old system,” stressed Dimitrij Zadel, President of the Management Board of Luka Koper, d.d.
Additional employment is foreseen in 2020. As a result, labour costs will be higher compared to 2019. The cost of port services will increase as well. While external contracting costs will be reduced due to the smaller volume of services provided by them, the company will have to consider the cost of agency workers. In total costs, we have taken into account the throughput tax, which is one of the sources of financing for the construction of the second Koper-Divača railway line. The increase in total costs will thus have an impact on the amount of operating profit and net profit. The latter will be 19% lower in 2020 than estimated in 2019, but will nevertheless exceed 30 million euros, which guarantees the company the continuation of its development projects and the implementation of its dividend policy.
On a global scale, profound internal changes in work organisation are happening simultaneously with the global and regional changes in logistics and economic conditions. Trade wars, Brexit, political unrest and the cooling of the economy all contribute to business uncertainty. Competition among neighbouring ports is also increasing due to strategic partners entering the ownership and management structures of terminals or of already established infrastructure connections. The largest container ships in the world which have to be loaded, dock in northern European ports. This is why shipowners are trying to divert cargo there from the markets of Central Europe. Added to this are problems with regard to the railway connection between the Port of Koper and the hinterland in recent years, which was the reason why logistics companies established alternative connections. “These are all objective facts that the company has no influence on but must deal with. Trade between Asia and Central Europe is increasingly dependent on fast, modern and efficient rail links. From this point of view, Slovenia has done a great deal, especially by taking a decisive approach to the construction of the second railway line between Koper and Divača and by investing in the modernization of the entire railway network,” added President of the Management Board Dimitrij Zadel.
At the Port of Koper, on the other hand, we are increasing our capacity: by the beginning of 2020, we will complete our investment in a new ro-ro berth in Basin III and in additional train tracks adjacent to the same basin, all aimed at increasing the capacity of the Car Terminal. Notwithstanding the decline in vehicle throughput in 2019, mainly due to a decline in car exports to Turkey, investments in this area are sensible and necessary since the Port of Koper has no serious competition in the region. In addition, by the end of 2020, we will have a new parking garage at our disposal, the extension of the container terminal's quayside will be completed, and the construction of storage areas on the extended Pier I will continue and will be completed in 2021. This will provide the Container Terminal with the necessary additional capacity to enable us to continue to compete for primacy in the northern Adriatic. Despite unrelenting competition, the Port of Koper still has the best potential for developing container transport in the region, especially given the positive developments in the efficiency of the existing railway line, which should be sufficient to bridge the period until the construction of the second railway line.
The year 2020 will also see the implementation of the new Strategic Business Plan 2020–2025, which focuses on business growth, the reorganization of work processes, digitization, automation, and all aspects of sustainable development. In the Port of Koper, we are aware that only those logistics companies that have a clear sustainable development strategy can expect stable growth in the long run. Many stakeholders, especially at the local level, expect this from us, as do our business partners, who increasingly place a sustainable focus at the heart of their business policies. The cost of the entire logistics route, i.e. the sum of the costs of maritime and land transport, is increasingly at the forefront of logistics, as is the environmental impact of related activities. The port itself will no longer play as large a role as in the past if it does not have conditions for growth and development, state-of-the-art land connections, and the support of all stakeholders. These are the key questions answered by the new Strategic Business Plan.
The Management Board