d'Amico International Shipping S.A. publishes third quarter results

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

30 Oct 2009

The Board of Directors of d’Amico International Shipping S.A. approves Q3 2009 Results and the Company’s 2010 financial calendar. ‘Difficult market environment reflected by the Q3 Net Loss of US$ 11.4 million (US$ 7.8 million excluding non cash forex items), but operating cash-flow at break-even level and relevant cash on hands’.
The steady supply of ships, driven by the large influx of new buildings into the market, has resulted in significant pressure on the spot rate. Considering the difficult operating environment, characterized by the world economy recession combined with vessel over-capacity, the d’Amico International Shipping (DIS) results should be considered as relatively good. The significant percentage of fixed contracts coverage, the strong market
positioning, together with efficiencies in general and administrative costs and the solid balance sheet allowed DIS to sail at the water line, close to its break-even level.
OUTLOOK
d’Amico International Shipping’s outlook remains substantially in line with the disclosure previously shown this year, confirming that it is still significantly influenced by the current weak product tanker demand and an uncertain worldwide economic scenario. As a consequence, DIS management maintains a very cautious approach regarding it. Product tanker rates have declined since the beginning of the current year, with the largest correction in Q2. There were no substantial further large reduction in Q3 and no further larger decrease going into the last quarter of the current year is expected. The rates remain under pressure and a stabilisation or an improvement, also considering the relevant net fleet growth, would not occur until economies start to improve, generating a demand support.
The first nine months of 2009 have been characterized by the continued decline in Product Tanker rates up to the end of September. The spot market performed reasonably well in the first two months of 2009, however, since the end of February, and as a consequence of the economic slow-down, the product tanker industry has experienced an unprecedented low spot market. The Product tanker demand has decreased throughout
February and to a larger degree in March and in the following quarter, albeit not at the same pace. The market came off from the short lived improvement in May and in September in Asia, but not to the same degree as in May. The improving oil price since the beginning of the year has been reflected in increased bunker costs that in turn affect earning levels. Refinery utilization rates and profit margins have also slumped in 2009 on the back of weak demand for most clean petroleum products and existing healthy stocks. On the other side, both the products dislocation demand and long haul arbitrage business have not materialized as in previous years. The steady supply of ships, driven by the large influx of new buildings into the market, has resulted in significant pressure on the spot rate. Considering the difficult operating environment, characterized by the world economy recession combined with vessel over-capacity, the d’Amico International Shipping (DIS) results should be considered as relatively good.
The third quarter average Time Charter Earnings (TCE) rate per employment day was of US$ 13,879 (US$ 16,526 on nine months basis). Driven by those weak rates, DIS realized in Q3 a net loss of US$ 11.4 million (US$ 7.8 million excluding the non-cash exchange rate loss relating to the conversion on JPY denominated loans into US$), while in the first nine months of the current year, thanks to the positive Q1 results, the accumulated net loss was of US$ 4.2 million. The gross operating profit (EBITDA) was US$ 4.2 million in Q3, resulting in nine months EBIDTA of US$ 28.7 million. The widely different market scenario does not allow to consistently compare the 2009 results with the market peak in 2008, when DIS net profit in Q3 was of US$ 15.9 million and US$ 43.2 million in the first nine months (US$ 90.3 million including the gain on the disposals of vessels of additional US$ 47.1 million). The significant percentage of fixed contracts coverage, the strong market positioning, together with efficiencies in general and administrative costs and the solid balance sheet allowed DIS to sail at the water line, close to its break-even level.

Source: d’Amico International Shipping