Today, on August 27, Supervisory Council of  JSC Latvijas kuģniecība (Latvian Shipping Company – LASCO) has reviewed and acknowledged the Group’s financial results achieved during the first half of 2008. LASCO Group performance during the report period demonstrates evidently the efficient and professional commercial management of its fleet and the reasoned strategic decisions taken - regardless of the unfavorable impact of various external factors on company’s performance, LASCO has worked with success and has earned profit in the amount of USD 42.1 million during the report period.

Group’s Net Voyage result has reached USD 111.7 million or USD 10.9 million more than over the respective period a year before. LASCO Group’s Net Profit is USD 42.1 million and both, the vessel operating profit of USD 34.1 million as well as successful selling of six elderly vessels with profit of USD 27.7 million has contributed to the result attained. The deviation of profit indicators compared to the analogue a year before are basically explained by the different revenues from vessel disposal: the profit from asset disposal has been USD 38.0 million in the first half last year, whereas it stands at USD 27.7 million during the report period.

Over the first half of 2008 LASCO Group has been proceeding with the implementation of its strategic goal set – ensuring increase of LASCO value and securing its place among the top ten medium range tanker owners in the world.

Uldis Pumpurs, Chairman of LASCO Supervisory Council concludes: “It is utmost important that the Company’s top management works closely together with its employees in implementation of the Group’s strategy, and I am pleased that joining all our efforts  we succeed in accomplishment of the strategic tasks deriving from the interests of the Company and its stakeholders”.

LASCO Group’s assets have grown during the report period reaching USD 897.5 million on June 30, 2008. The Group’s unaudited equity has comprised USD 531.0 million. 

All the LASCO shares are being traded publicly at the Official List of Riga Stock Exchange. During the first half of 2008 the trade with LASCO shares has represented the biggest turnover among the companies listed at Riga Stock Exchange – there have been  1 490 transactions made with 4.38 million shares with total value of LVL 4.75 million.  LASCO share capitalization at Riga Stock Exchange has reached LVL 246 000 000 on June 30, 2008.

During the first six month of 2008 LASCO fleet has worked with profit in all the segments. Regardless of the dramatic increase of crude oil price affecting bunker costs accordingly, the optimum application of various freight types responding to the situation in the shipping market provided for performance with profit in all the LASCO fleet segments – the vessel operating profit reached USD 34.1 million during the report period, compared to USD 34.7 million for the respective period last year.

At the beginning of the report period the tanker voyage charter rates had fallen to their lowest level of the decline experienced at the final quarter of 2007 and gradually the market recovery commenced. At the end of the first quarter of 2008 and the beginning of the second the activities in oil shipments encouraged optimism among the market players regarding development of freight rates.  Even though to a lower extent than the year before LASCO Tanker fleet has provided the largest contribution to the total vessel operating profit  - 79 per cent or USD 27.1 million during the report period.   

Both LPG carriers of the LASCO fleet “Vidzeme” and “Kurzeme”, built in 1997, continued to operate successfully within the “ScandiGas” pool during the report period. Their contribution has increased by USD 0.6 million compared to the respective period of 2007. In the first half of 2008 LPG sector represented 13 per cent of the total vessel operating profit or USD 4.3 million. 

In accordance with LASCO Operations Strategy and the decisions taken before, there have been three “Akadēmiķis Vavilovs” type reefer vessels sold. The revenues from their sale have been invested in four medium range tanker newbuildings. The remaining two reefer vessels of the LASCO fleet have been working in accordance with their agreements, in time charter mainly. Considering the reduction of operation costs (crewing, dry-dock and repairs, equipment, etc.) due to the sale of vessels as well as increase of the time charter rates, the profit from reefer operations is USD 0.6 million higher than during the same period in 2007.  

The dry cargo vessel of the LASCO fleet continued to work in accordance with a time charter agreement generating solid and predictable profit slightly over USD 0.4 million during the first half of 2008.

In the first half of 2008 within the Tanker Fleet Renewal Programme LASCO took the delivery of one tanker newbuilding “Užava” from “3. Maj” shipyard in Croatia. Another tanker newbuiding “Salacgrīva” had been received just after the report period on July 24, 2008. During the second half of 2008 LASCO will take the delivery of the last tanker newbuilding from ten ordered at “3. Maj” shipyard in Croatia thus completing the Tanker Fleet Renewal Programme launched in 2004. In total LASCO will have received 14 new and modern tankers from Korean and Croatian shipyards complying with all the requirements of international shipping safety conventions.  

LASCO President Imants Sarmulis underlines: “Accomplishment of the fleet renewal programme has boosted the Group’s confidence – over the last couple of years LASCO has taken delivery of 12 tanker newbuildings within the programme and, given the freight rates, their revenues have been considerably higher, than those of the older tonnage. The systematic approach to the tanker fleet renewal is the good news to our present and potential business partners evidently proving LASCO’s long term development perspectives.”

In addition to the fleet renewal programme mentioned above, according to the tanker fleet development scenario foreseen in LASCO Operations Strategy for the period till 2015, there are four medium range 52 000 DWT tankers being built at “Hyundai Mipo Dockyard Co., Ltd” in Korea.  The optimum parameters of the tanker newbuildings ordered will provide for their comprehensive employment in oil product, chemical cargo and vegoil shipments.

 
Information:
The core business of LASCO is freight shipments among the ports worldwide. At the end of the first half of 2008, the fleet in LASCO commercial management was comprised of 40 vessels - 35 tankers, two LPG carriers, two reefer vessels and one dry cargo vessel.