Norway's Jinhui Shipping posts gloomy 2009 outlook

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 May 2009

Norwegian dry bulk shipper Jinhui Shipping said its outlook remained extremely challenging after it posted forecast-beating first-quarter profit, lifted by one-off gains. Jinhui Shipping, the smaller peer of Bermuda-registered, Oslo-listed Golden Ocean, said operating results in the quarter ending in March rose to $53 million from $49 million, beating forecasts in a Reuters poll which ranged from $6 million to $39 million.
It said results included $39.7 million received for the cancellation of contracts. The company said in a statement 2009 would be extremely tough "even for the largest and strongest shipowners."
Freight rates in the highly cyclical dry bulk market plunged last year during the global downturn, but have picked up recently.
The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose to a near eight-month high this week helped by China's demand for goods.
"One of the many reasons we believe that the outlook remains extremely challenging is because we are experiencing a deleveraging on a global scale that is mind-blowing in its scope," Jinhui Shipping said.
Numerous governments have been pumping liquidity into the banking system but Jinhui said much of it remained in the banks which were still reluctant to increase lending.
It said economic activity would remain depressed and market volatility would be highly likely if banks maintained their current stance.
UNVERTAINTY BEYOND 2009
Jinhui Shipping said the outlook beyond 2009 depended on the development in global trade volumes, the availability of credit, the freight market and vessel values.
A lower-than-expected increase in vessel supply has contributed to the increase in freight rates, Jinhui said. Supply has been reduced due to increased scrapping of older vessels and fewer newbuilds than forecast being delivered.
"Market values of vessels have also seen an uptrend in the face of an increase in the number of buyers looking for prompt tonnages," the company said.
The company said it would not pay any dividend for the quarter.
Shares in Jinhui Shipping closed at 14.40 crowns on Thursday, giving it a market capitalisation at about 1.22 billion crowns.

Source: Reuters