Although the first half of 2010 was one of the most complicated in history of AS “Latvijas kuģniecība” (JSC “Latvian Shipping Company”), the Group has managed to take advantage of the possibilities provided by the crisis and substantially improve age structure of the group’s fleet, by selling the “Kherson” tankers, the average age of which exceeded twenty years and which were financially unprofitable. Thus already this year the Group will sell out the older ships and its fleet will consist of only modern and competitive tankers with an average age of 6 years that is considerably lower than the average ratio in the world. The strategy chosen by JSC “Latvian Shipping Company” is justified by although moderate yet stable rise of the charter rates in the segment of the new tankers. Considering that during the reporting period the ship charter rates were historically low JSC “Latvian Shipping Company” losses during the first six month of 2010 reached USD 25.2 million. This result complies with the cautiously drawn up budget plan.

 

In comparison with the first 3 months of 2010 improvement of the Group’s financial results during the 2^nd quarter is conspicuous, as the total result of the shipping area during 6 months of 2010 was positive and reached USD 3.7 million. The Group’s total income from shipping (net voyage result) during the first half of the year reached USD 43.9 million, but income unrelated to core operation amounted to USD 1.4 million. The financial result of JSC “Latvian Shipping Company” Group during the first half of the year was mainly worsened by losses caused due to the substantial rise of the USD exchange rate against LVL.  

 

Financial results of JSC “Latvian Shipping Company” allow concluding that most probably the lowest point of the Group’s financial operation has been overcome and there is basis for a cautious optimism that during the next reporting periods along with improvement of the charter markets financial results of JSC “Latvian Shipping Company” shipping operations could reach higher profitability.  

 

During the first half of 2010 JSC “Latvian Shipping Company” has implemented a well-considered chartering strategy – during the critically low charter rate period fixing the rates for short-term rent, but along with the market recovery, returning in the time-charter market and fixing the charter rates for a longer period, thus minimizing the losses.  

 

 

The JSC “Latvian Shipping Company” subsidiary SIA LASCO Investment spent the reporting period in implementing the developed strategy for adding value to the real estate projects – a development concept for the exclusive property located at 3 Balasta dambis, Riga, in cooperation with the real estate consulting company „Cushman&Wakefield” and architect Larry Oltmanns.

 

A substantial progress has been reached in the legal procedure of the companies of JSC “Latvian Shipping Company” Group (Antonio Gramsci Shipping Corporation etc.) claiming recovery of losses in amount of LVL 100 million that is being reviewed in the Supreme Court of Justice Queen’s Bench Division Commercial court in London. The Court of Appeal has refused to bring an action upon the respondents’ claim. Thus, in the nearest future a decision favourable to the claimant will be taken, where exact amount of the losses to collect shall be set out.

 

 

  

Additional information:

Ģirts Apsītis

Adviser of the Chairman of the Management Board

Latvian Shipping Company

Phone: +371 67020126