The global port operator generated more than $1 billion in operating cash flow and nearly $590 million in profit attributable to shareholders. Excluding changes in its terminal portfolio, its EBITDA margin would have widened to 66.2 percent.
International Container Terminal Services Inc., the global port operator led by billionaire businessman Enrique K. Razon Jr., reported sharply higher earnings for the first half of 2026, supported by higher tariffs, a more profitable cargo mix and growing revenue from services beyond basic container handling.
For the six months ended June 30, ICTSI’s gross revenue from port operations rose 27.1 percent to $1.92 billion, from $1.51 billion a year earlier. Earnings before interest, taxes, depreciation and amortization, or EBITDA, increased 24.3 percent to $1.23 billion, while consolidated net income climbed 22.4 percent to $641.4 million.
Net income attributable to ICTSI shareholders reached almost $590 million, up 21.9 percent from $483.8 million. Basic earnings per share increased 22.9 percent to 29 cents, from 23.6 cents, while diluted earnings per share rose to 28.9 cents from 23.5 cents.
The headline figures reflected the addition of new operations, particularly the Durban Gateway Terminal in South Africa and Batu Ampar Container Terminal in Indonesia. But ICTSI’s disclosures also pointed to strength in its established portfolio.
Excluding the effects of new and discontinued operations, the company said EBITDA would have increased 18.2 percent. More significantly, its adjusted EBITDA margin would have widened to 66.2 percent, from 65.6 percent a year earlier. That compares with the reported consolidated EBITDA margin of 64.1 percent, down from 65.6 percent, as newly added operations brought substantial costs alongside their revenue.
The adjusted figures suggest that ICTSI’s core collection of terminals became more profitable during the period, even as acquisitions and expansion projects temporarily diluted the group’s reported margins.
Revenue Grew Faster Than Container Traffic
ICTSI handled 8.12 million twenty-foot equivalent units, or TEUs, during the first half, an increase of 16.1 percent from 6.99 million TEUs a year earlier. But excluding Durban, Batam and the discontinued Yantai operation in China, underlying container volume would have increased by only 1.2 percent.
By contrast, revenue excluding those portfolio changes would still have grown 17.6 percent. The divergence indicates that ICTSI’s earnings were driven less by underlying container growth and more by higher tariffs, favorable cargo mix, ancillary services and currency movements.
Based on the reported figures, gross revenue per TEU increased to approximately $237, from about $216 in the first half of 2025 — an improvement of roughly 9.5 percent.
ICTSI said revenue benefited from tariff adjustments at certain terminals, higher ancillary service income, and a favorable container mix. Currency translation was also helpful, particularly as revenues denominated in the Mexican peso, Australian dollar, and Brazilian real appreciated against the United States dollar.
The company’s share payable to port authorities rose at a slower rate than revenue, increasing 15.3 percent to $158.9 million. As a result, net port revenue advanced 28.3 percent to $1.76 billion, from $1.37 billion, and represented 91.7 percent of gross port revenue, compared with 90.9 percent a year earlier.
Americas Delivered Broad-Based Growth
Revenue increased across all three of ICTSI’s geographic segments, though the sources and quality of growth varied.
The Americas generated $751 million in revenue, an increase of 31.1 percent, as container volume rose 13.9 percent to 2.23 million TEUs. The company attributed the performance largely to increased trade activity and new shipping services at terminals in Ecuador and Mexico, along with favorable cargo mix, tariff adjustments and currency translation.
Asia remained the group’s largest regional contributor by a narrow margin, with revenue increasing 15.6 percent to $753.3 million. Container traffic rose 7.4 percent to 3.95 million TEUs, supported by the full-period contribution from Batam and improved trade activity across Asia-Pacific operations. The figures were partly offset by the deconsolidation of Yantai at the end of March.
Revenue in Europe, the Middle East and Africa increased 45.6 percent to $415.6 million, while volume rose 42.9 percent to 1.94 million TEUs. Most of that growth came from Durban's first-time contribution. Without Durban, EMEA revenue would have declined 5.4 percent, and volume would have fallen 24.6 percent, largely because of lower activity at ICTSI’s Basra operation amid geopolitical conflict in the Middle East.
The regional figures underscore the importance of ICTSI’s geographic diversification. Strength in the Americas and the addition of South Africa offset weakness in parts of the Middle East. But they also show that reported EMEA growth should not be interpreted as broad-based organic expansion.
Reported Margins Narrowed
Despite its strong earnings growth, ICTSI experienced margin compression on a reported basis.
The company’s EBITDA margin declined to 64.1 percent from 65.6 percent, while its earnings-before-interest-and-tax margin fell to 53.1 percent from 55.1 percent. Its pre-tax margin narrowed to 43.7 percent from 45 percent, and consolidated net income equaled 33.4 percent of gross port revenue, down from 34.7 percent.
The erosion was caused principally by expenses rising faster than revenue. Total cash operating expenses increased 38.7 percent to $529.3 million, from $381.7 million. That lifted cash operating expenses to approximately 27.6 percent of gross port revenue, from 25.3 percent a year earlier.
Manpower costs recorded the largest increase, rising 48.1 percent to $290.8 million. They accounted for 54.9 percent of cash operating expenses, up from 51.4 percent. ICTSI cited the inclusion of Durban, government-mandated and contractual salary adjustments, employee benefits, higher contracted-service costs, and currency effects.
Equipment and facilities-related expenses rose 35.9 percent to $130.3 million, reflecting Durban’s cost base, higher fuel prices, increased equipment rentals, outsourced services and greater operating activity. Administrative and other operating expenses increased 20.9 percent to $108.3 million, partly due to higher taxes and licenses, technology spending, insurance, and subscription costs.
Cost pressure was not limited to newly acquired operations. Excluding the effects of new and discontinued terminals, manpower expenses still increased 21.3 percent, equipment and facilities costs rose 14.7 percent, and administrative expenses advanced 9.3 percent.
For now, tariff increases, ancillary services, and favorable cargo mix have more than compensated for these pressures at ICTSI’s established operations. The adjusted EBITDA margin of 66.2 percent indicates that the core portfolio retained pricing power and achieved operating leverage.
That balance could become more difficult to sustain if tariff adjustments moderate or growth in ancillary businesses — including storage, refrigerated-container services, weighing and inspection — slows. Labor and contracted-service costs are often difficult to reverse, while fuel and power prices remain vulnerable to geopolitical disruption.
Depreciation and Lease Costs Increased
ICTSI’s ongoing expansion also added costs below the EBITDA line.
Depreciation and amortization increased 33.5 percent to $211.5 million, reflecting the consolidation of Durban, the commissioning of new equipment and facilities, and the remeasurement of right-of-use assets at certain terminals. Consequently, EBIT increased 22.6 percent, somewhat slower than EBITDA.
Interest expense and financing charges on borrowings rose by a relatively modest 3.4 percent to $80.1 million. But interest on lease liabilities increased 21.2 percent to $85.3 million, partly because of Durban’s sublease and changes in lease liabilities at other operations. Interest on concession-right obligations increased 3.4 percent to $32.6 million.
ICTSI reported income before tax of $838.3 million, up 23.2 percent. Its tax provision increased 26.1 percent to $196.9 million, lifting the effective tax rate to 23.5 percent from 23 percent. The company attributed the increase partly to higher taxable income in higher-tax jurisdictions, including South Africa.
The results also included a $14.7 million nonrecurring loss on the disposal of the Yantai terminal. Most of that amount related to the reclassification into profit or loss of foreign-exchange differences that had previously been recorded in other comprehensive income. Excluding the disposal loss and the impact of new and discontinued operations, profit attributable to ICTSI shareholders would have increased 23.8 percent.
Durban Adds Scale but Dilutes Profitability
Durban Gateway Terminal contributed $145.6 million in revenue during the first half, but only $5.8 million in net income attributable to ICTSI shareholders. The contribution reflects the operation’s early-stage status under ICTSI management, as well as minority ownership, acquisition accounting, amortization, lease expenses, and taxes.
ICTSI took operational control of Durban on Jan. 1, 2026. Although it acquired 50 percent less one share, the company obtained control through its right to appoint three of the terminal’s five directors and direct relevant operational and financial activities. The terminal holds a sublease to operate Durban Container Terminal Pier 2 through the end of 2050.
The acquisition resulted in the recognition of approximately $743.4 million in intangible assets, $244.9 million in right-of-use assets and $248.1 million in provisional goodwill. ICTSI said the goodwill primarily reflected expected synergies from the transaction.
Durban gives ICTSI a substantial foothold at a major African container gateway, but its current profitability is well below that of the group’s mature terminals. Improving the operation’s efficiency and margins will therefore be one of the company’s most important tests over the next several years.
More Than $1 Billion in Operating Cash Flow
ICTSI’s cash flow provided perhaps the strongest indication of the quality of its earnings.
Net cash generated from operating activities increased 26.5 percent to $1.02 billion, from $808.6 million a year earlier. Cash generated from operations before tax payments reached $1.22 billion, while income taxes paid totaled $192.9 million.
Operating cash flow was approximately 1.59 times consolidated net income, compared with 1.54 times in the previous year. That suggests reported profits were supported by strong cash realization rather than primarily by noncash accounting gains.
ICTSI also continued investing heavily. Total disclosed capital expenditures — including property and equipment, concession-related assets and advances to contractors and suppliers, net of government grants — reached approximately $326.7 million, compared with $232 million a year earlier.
Subtracting that broad measure of capital investment from operating cash flow leaves approximately $696 million in indicative post-reinvestment cash generation, up about 21 percent from roughly $577 million a year earlier.
The calculation is not a formal measure of free cash flow. ICTSI’s financial structure includes service-concession assets, lease obligations, payments to port authorities, and acquisitions, which complicate conventional free cash flow analysis. Still, it shows that the company continued to generate substantial cash after funding terminal equipment, civil works, and expansion projects.
Cash Declined as ICTSI Returned and Deployed Capital
Strong operating cash generation was offset by significant outflows for financing and investments.
Net cash used in investing activities rose to $277.3 million from $180.4 million, primarily due to higher capital spending. Net cash used in financing activities increased to almost $1 billion, from $813.8 million.
The company paid $664.6 million in dividends, repaid $251.6 million in long-term borrowings, and spent $298 million redeeming perpetual capital securities. These outflows were partly offset by $462.8 million in proceeds from new long-term borrowing.
Cash and cash equivalents consequently declined to $855.1 million at the end of June, from $1.10 billion at the end of December. Total interest-bearing debt increased 6.8 percent to $3.37 billion, while equity declined 1 percent to $2.46 billion after dividends and the perpetual-security redemption.
The debt-to-equity ratio increased to 1.37 times, from 1.27 times at the end of 2025. Still, interest coverage improved to 15.38 times from 12.79 times, and the company remained in compliance with its debt covenants. About 91 percent of long-term debt was scheduled to mature in 2028 or later, limiting near-term refinancing pressure.
A Profitable Core Faces a Cost Test
ICTSI entered the second half of 2026 with a highly profitable core business, robust cash generation and an expanding international footprint.
The reported decline in margins warrants attention, but the company’s adjusted results suggest the deterioration was primarily due to portfolio changes rather than a weakening of established terminals. Without new and discontinued operations, EBITDA margin would have risen to 66.2 percent, while EBIT margin would have increased to 56.3 percent from 55.1 percent.
Its next challenge is to bring newer operations, particularly Durban, closer to the profitability of the established network while preserving the pricing and ancillary-revenue gains that drove the first-half performance.
Fuel, electricity, salary adjustments, contracted labor and outsourced services are becoming more expensive. If tariff increases and ancillary-service growth slow before those costs stabilize, ICTSI’s unusually high margins could come under greater pressure.
For now, however, the combination of an expanding underlying EBITDA margin and more than $1 billion in operating cash flow indicates that Razon’s core port business remains a formidable earnings and cash-generating operation.
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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.
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