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The December quarter results of local shipping companies were on expected lines, given the significant fall in global freight rates
The financial results of leading shipping companies for quarter ended on December 2009 has been hit by significant fall in freight rates due to global economic slowdown and decline in movement of cargo. The average freight rates for Very Large Crude Carriers (VLCC) and Suezmax segment reported a decline of ~ 62% YoY to $ 17,716 per day and decline of 67% YoY to $ 13,989 per day respectively. The spot rates for Aframax also reported 69% YoY decline during the quarter. The earnings in product carriers recovered to above operating cost during the Q3FY10 which were unable to cover operating cost of voyage resulting into significant erosion of profitability in Q2FY10. Baltic Dry Bulk Index (BDI), which is measure of the shipping cost for dry bulk commodity on major shipping routes and for different size of vessels, recovered mainly because of port congestion due to seasonal demand for coal from china. BDI reported an increase of 114% YoY (QoQ increase of 23.2%) to 3,642 during the quarter.  Largest diversified Indian shipping company Shipping Corporation of India (SCI) reported a decline of 24.05% year on year (YoY) in revenue to Rs 8.45 billion for Q3FY10. SCI reported a decline of ~20.46% to Rs 6.68 billion in bulk segment while its liner segment reported a revenue decline 7.7% to Rs 2.16 billion on year-on-year basis. The company's liner business continues to drag its profits with loss of Rs 457.9 million in Q3FY10 and loss of Rs 2.16 billion in first nine months of financial year at PBIT (profit before Interest and Tax) level.  GE Shipping reported a revenue decline of 27% YoY (QoQ increase of 6.6%) to Rs 7.06 billion in Q3FY10 due to a significant decline in freight rates in tanker segment and 6.2% decline in operating days to 3,402. The average time charter yield (TCY) in crude and drybulk segment declined by 52.7% to $ 17,778 per day and by 31.9% to $ 20,964 per day, respectively, while product carrier segment reported a decline of 17.2% in TCY to $ 19,131 per day. On standalone basis, GE Shipping reported a decline of 33.5% to Rs 4.66 billion and net profits decline of 53.1% to Rs 1.03 billion.  Varun Shipping has reported a revenue decline of 35.5%YoY (QoQ increase of 9.35%) to Rs 1.72 billion in Q3FY10. The operating margin declined from 56.2% in Q3FY09 to 28.05% in Q3FY10 due to sharp decline in freight rates in tanker and offshore segment. Operating profit declined by 67.8% YoY to Rs 482.5 million. The interest cost increased by 38.5% to Rs 550.4 million and depreciation cost increased by 9.12% to Rs 619 billion mainly due to addition of two new AHTS during the year. Higher fixed cost and decline in revenue resulted into loss of Rs 683.7 million during the Q3FY10 as compared to profits of Rs 531 million in corresponding quarter last year. The company had gained Rs 670 million on sale of a ship which helped it to report the loss at Rs 13.7 million.  Mercator Lines (consolidated) reported a revenue decline of 10.9% YoY (QoQ increase of 16.2%) to Rs 4.72 billion in Q3FY10. The revenue from coal mining business increased by 141% on QoQ basis to Rs 1.49 million during the quarter. EBIDTA margins declined from 39.6% in Q3FY09 to 30.96% in Q3FY10. The margin decline was mainly due to decline in freight rates and higher revenue from low margin coal mining business. The company had ~ 6% margins in coal business in Q3FY10. Operating profits declined by 30.44% YoY to Rs 1.46 billion. Depreciation charges increased by 17.8% YoY to Rs 849 million. It reported a loss of Rs 5.5 million in Q3FY10 as compared to profits of Rs 666.9 million in Q3FY09. (Our Shipping Analyst) |
