Polaris marks turnaround with $1.38m profit
Dock services firm Polaris Holding Company Ltd has returned to profit after three years of restructuring.
Polaris, the parent company of Stevedoring Services Ltd, announced profits of $1.38 million, or $1.16 per share, for the year ended March 31, 2016.
It marks a strong turnaround after three years of losses totalling nearly $2.5 million for the company headed by chief executive officer Warren Jones.
The bulk of Polaris’ income came from Stevedoring Services, which generated $10.57 million in revenue, up by $1.35 million, or 14.6 per cent on the previous year. The company moved 34,901 20ft equivalent containers, up 5.4 per cent on the previous year and the highest number since 2011. The company attributed the increase to the island’s improving economic situation.
In the Bermuda Stock Exchange-listed company’s first formal annual report, Mr Jones, a former civil servant who was appointed in January 2014, said: “It has been a bumpy few years, but in fiscal 2016 Polaris emerged focused, stable and profitable after an extended period of malaise.”
Cheryl Hayward-Chew, who was appointed chairman in 2013 as part of a major overhaul for the company, described how the success story was the product of significant changes.
“While it is tempting to conclude that the company’s success was simply the result of a more buoyant economy, and while that is part of the story, Polaris’ dramatic turnaround and positive position runs far deeper,” Ms Hayward-Chew said.
“Polaris’ financial success has been primarily built around its staff and a three-year administrative clean-up and operational reorganisation which saw headcount reduced, pay rates frozen, improved training, enhanced relations with the Corporation of Hamilton, Bermuda Industrial Union, the company’s customers and key stakeholders and a material investment in equipment, maintenance and infrastructure.”
The chairwoman added that during the past year Polaris had produced a strategic action plan, in which the stated missions include consistently achieving net income equal to a 12 per cent return on equity by 2020. Last year’s ROE was 12.5 per cent.
Polaris highlighted improved labour relations as a key factor in the firm’s successful turnaround, based on an agreement struck with the Bermuda Industrial Union in June 2014.
“The positive nature of these negotiations and the transparency on both sides of the table represented the beginning of a new relationship between management and its unionised staff,” Mr Jones said in the report.
He added that Polaris had managed to cut staffing costs in 2015, through early retirement, reducing overtime rates and a salary freeze. In April this year, Polaris struck a deal with the BIU, part of which stipulated that wage increases would be earned only if the company achieved “a minimum level of profitability”.
Last year, the improvements were recognised when Stevedoring Services placed eighth in The Bottom Line’s Top Ten Employers in Bermuda awards, which are based primarily on surveys of employees.
Polaris highlighted its good relations with the Portworkers Division of the BIU in the annual report, adding: “Our success would not have been possible if we together did not create a framework based on trust, transparency and frank discussion.”
The company spent $4.69 million on salaries, wages and employment benefits in the past fiscal year, up from $4.45 million the previous year.
In January 2016, the company signed a five-year terminal operator’s deal with the Corporation of Hamilton, cementing its future until 2021.
Mr Jones said Stevedoring’s major goal was to put itself in the best possible position to renew the operating licence and with this in mind, the company had undergone an independent operational review. The results are being analysed and discussed now, Mr Jones added.
In fiscal 2016, the company initiated a stock repurchase tender and offered to buy back shares for $4 apiece at a time when they were trading for the $3.11 on the BSX. A total of 25 shareholders offered up 61,068 shares for repurchase and cancellation, representing nearly 5 per cent of shares outstanding.
Yesterday Polaris shares closed at $4 on the BSX.
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