The long-term stagnation in the global shipping market has been seen most vividly in the dramatic drop in shipping rates and the forced stoppage of ships because of the equally dramatic decline in cargo amounts.  Despite this, the JSC Latvijas kuģniecība (Latvian Shipping Company - LASCO) ensured carefully considered and balanced results in its operations during the first quarter of 2010.  The concern has not been able to avoid the consequences of the economic decline even if its strategy has been fully in line with market trends, but unaudited consolidated results during the first three months of 2010 were better than expected.  The company’s net loss was USD 10.6 million, or 35% less than had been forecast.

The Latvian Shipping Company did not earn much money from its fleet – something that reflects the overall situation in shipping markets.  The operating costs of ships were not even covered.  The results were also worsened substantially by unplanned losses caused by currency exchange rate shifts, particularly in terms of the US dollar.  During the first quarter of 2010, the Latvian Shipping Company earned USD 25.2 million, which was in line with planned results in terms of shipments, the company’s budget, and the net turnover of the concern’s subsidiaries.  Effective management of financial resources allowed the company to cut administrative costs by 60% during the first quarter in comparison to the same period last year.

Experts at the company think that the low point in operations has probably been reached and overcome – this after a carefully evaluation of operations and a look at what the company might be able to do in global shipping markets.  There is reason for cautious optimism that the Latvian Shipping Company’s results will improve as shipping rates increase.

Marsh McLennan, which is one of the world’s leading insurers of maritime risks, continues to list the Latvian Shipping Company among the most attractive business partners in the shipping industry.  This clearly shows that company’s long-term stability despite the crisis and short-term difficulties which it and the subsequent process of stagnation have caused.  Over the course of many years, the Latvian Shipping Company has been seen as a major player in the niche of medium-sized tankers, and that continues to be the case now.  This is a niche in which highly qualified crews are needed onboard ships, which means that the company’s operational risks are minimal.

The first quarter of 2010 was a time when the shipping business saw low market activity and much lower rates, but the Latvian Shipping Company minimised risks and losses.  In comparison to other participants in the market, it has concluded advantageous short-term shipping rate agreements for nearly all of its tankers, thus implementing effective policies that make it possible to use the fleet in accordance with market circumstances.  During the course of Q1, the company concluded 35 transactions involving its ships.

The Latvian Shipping Company is continuing to improve the competitiveness of its tankers at the international level by concentrating resources on the strategy of upgrading the fleet.  This is an opportunity which the crisis has created.  Older ships are being sold as advantageously as possible to allow the Latvian Shipping Company to maintain and increase its role in the segment of medium-sized tankers.  Two tankers were sold in the first quarter of the year, and five others are to be sold.

The consistent updating of the fleet has allowed the Latvian Shipping Company to reduce the average age of its ships by more than one-half – from 17.5 years in 2005 to 7.9 years right now.  During the first six months of this year, the average age of the fleet will decline to five years.  The upgrade programme allows the Latvian Shipping Company to put together a fleet that is in line with international standards.  As the economic situation in the world recovers, that will be a cornerstone for the company’s success.  That, in turn, will serve the interests of all of its shareholders.

The Latvian Shipping Company is a public stock company with shares on the NASDAQ OMX Rīga exchange.  All of the company’s shares are traded publicly on the exchange’s official list.  Both at the beginning and the end of Q1 2010, the share price was LVL 0.40, and during the three months, it ranged from LVL 0.35 to LVL 0.52.  691 transactions involving 2.54 million shares worth LVL 0.92 million were conducted during the quarter, making the Latvian Shipping Company’s shares among the most actively traded ones during the three months.  Indeed, this represented 57% of all share transactions on the official list, as well as 30% of overall turnover.  On March 31, 2010, capitalisation of Latvian Shipping Company shares at NASDAQ OMX Rīga was at a level of LVL 80 million.

The Latvian Shipping Company is among the world’s leading owners of small and medium tankers, and in terms of oil product deliveries, it is among the top shipping companies in Northern Europe.  The Latvian Shipping Company owns 23 modern ships with experienced and well-trained crews.  The company manages a total of 25 ships – two of them belong to other owners.  During the next few years, the fleet will be supplemented with four new medium-sized ships for oil product transportation.

For more details:

Marita Ozoliņa-Tumanovska

Manager of PR & Advertising Department

Telephone +371-67020120, 29287169

marita.ozolina@lscgroup.lv