GE Shipping Q2FY10 consolidated Net Profit at Rs.108.47cr

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

31 Oct 2009

The Board of Directors of The Great Eastern Shipping Company Ltd. (G E Shipping) today approved the Unaudited Financial Results (Provisional) for the second quarter of FY 2009-10, ended September 30, 2009. Performance Review of Q2 FY 2009-10 (standalone basis):
The operating profit (PBDIT) excluding gain on sale of ships was down 71% q-o-q. This
was largely due to lower TCY rates and to a small extent due to lower revenue days.
FLEET DEVELOPMENT:
Sale & Purchase Activities during Q2 FY2009-10:
During the quarter:
- The Company delivered its 2007 built Medium Range (MR) product tanker “Jag Panna”
to the buyers.
- The Company entered into an agreement with the shipyard to cancel one of the
newbuilding Kamsarmax bulk carriers scheduled for delivery in Q1 FY2012.
Subsequent to the quarter:
- The Company contracted to sell a 1996 built Suezmax crude carrier “Jag Layak” with
likely delivery in Q1FY11.
Capital Expansion Plan
The Company currently has a total capex commitment of around USD 437 mn, which
translates to approx. Rs. 2075 crores at current exchange rates. This will result in addition
to the tonnage of about 0.68 mn dwt (2 tankers & 5 dry bulk carriers).
MARKET COMMENTARY:
Throughout the quarter, the tanker market remained depressed with earnings close to
operating costs. The major reason for this was high crude inventory levels coupled with
decline in demand for refined products from OECD countries, resulting in huge over
supply.
On the other hand, the dry bulk trade improved due to large iron ore and coal imports by
China. This coupled with increased tonne-mile and port congestions helped the rates to
firm up. On the supply side, significant scrapping and orderbook slippage limited the
fleet growth.
OUTLOOK:
Tanker Market:
Even though, IEA has projected an increase in the oil demand in 2010, the tanker rates
are expected to be under pressure in the medium term. Large US oil inventories coupled
with new building deliveries will keep tanker rates down. On the product tankers side,
low refining margins and depressed demand will add to the existing pressure on rates.
But accelerated single hull phase out and significant orderbook slippage could relieve
some supply side pressure.
Dry Bulk Market:
Going forward it is very unlikely that the upward movement in the BDI will sustain. The
market may soften from the current level as there could be a reversal in demand
conditions especially for iron ore & coal from China in short to medium term. To witness
a significant improvement in the dry bulk trade, there has to be steady increase in the
industrial production in developed nations. On the supply side, we can expect large
numbers of slippages, cancellations & scrapping activities, but still excessive fleet
addition will be a key concern.
Offshore Market:
Although crude prices have staged a substantial recovery over the last 2 quarters, activity
level in the offshore drilling and services sector continues to be subdued. Uncertainty
about sustainability of the global economic recovery and financing related issues have so
far kept many of the E&P Companies from committing additional Capital expenditure on
the exploration and development of offshore fields. Weakness in activity and increased
vessel supply has kept the utilisation and charter rates at levels lower than those seen over
last 2-3 years. Going forward over the medium term, expected stabilization of oil price
above USD60 and under-investment in last few quarters is expected to result in an
increased level of activities resulting in improved charter rates and utilisation levels.
REVENUE VISIBILITY:
As on September 30, 2009, the revenue visibility is around Rs.442 crores for the balance
part of FY 2009-10. Crude tankers and product carriers are covered to the extent of
around 54% and 70% of their operating days respectively. In case of dry bulk carriers
they are covered to the extent of around 61% of the fleet’s operating days. Gas Carriers
are covered to the extent of 100% of their operating days for the balance part of FY 10.
DEVELOPMENTS IN THE SUBSIDIARIES:
Greatship (India) Limited:
The wholly owned subsidiary Greatship (India) Limited along with its subsidiaries
currently owns a 350’ft Jackup rig, 5 Platform Supply Vessels (PSV) and 8 Anchor
Handling Tug Supply Vessels (AHTSV). It has currently on incharter one Jack up Rig
and one PSV.
In Q2 FY2009-10, Greatship (India) Limited took delivery of “Greatship Aarti” an 82T
Anchor Handling Tug cum Supply Vessel (AHTSV). Subsequent to the quarter,
Greatship Global Energy Services Pte. Ltd. (GGES), a Singapore incorporated subsidiary
of Greatship (India) Limited (GIL), took delivery of “Greatdrill Chitra”, a 350 ft Jackup
Rig, from Keppel FELS yard, Singapore.
It has a committed capital expenditure of USD 467 mn (approx Rs.2218 crores at current
exchange rates) for 12 more assets. These include 8 Multipurpose Platform Supply &
Support Vessels, 2 MSVs and 2 AHTSVs. These assets are likely to be delivered in FY10
and FY11.
As on September 30, 2009, the revenue visibility is around Rs.381 crores for the balance
part of FY 2009-10. AHTSVs and PSVs are covered to the extent of around 39% and
69% of their operating days respectively. In case of the Jackup rig, it is covered to the
extent of around 84% of the operating days for the balance part of FY 10.
The Great Eastern Chartering LLC (Sharjah):*
This wholly owned subsidiary was set up in November 2004 with the objective of
inchartering tankers as well as dry bulk vessels and the commercial operation of such
inchartered tonnage. This company currently operates 1 tanker and 2 dry bulk carriers
with varying durations.

Source: Great Eastern Shipping