Emitents | Latvijas kuģniecība, AS (48510000VYR04HZGC213) |
Veids | Citi |
Valoda | EN |
Statuss | Publicēts |
Versija | |
Datums | 2011-12-08 11:39:51 |
Versijas komentārs | |
Teksts |
JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) revenues have declined substantially between 2009 (108.8 million LVL) and 2010 (58.8 million LVL) and into 2011 (9months – 35.9 million LVL), which is due to a deteriorating market over the past 2 years. Less demand for refined products in developed western economies has negatively impacted earnings for tanker owners. The "boom" years in the period 2004-2008 encouraged the construction of new tankers and as time charter rates decreased so did the value of tankers. Therefore Latvian Shipping Company (LSC) has, along with its peers, suffered due to the recent difficult economic conditions. However LSC is in a better financial position than many other ship-owners that have over-extended themselves in the boom years and have unsustainable debt obligations to their lending banks. During 2009 LSC’s fleet decommissioned 7 ships and has over
the same period re-focussed most of the business on the time
charter market – away from the more volatile short term spot
market. This has resulted in a significant reduction in
revenue because daily rates have gone down, there are less ships
and also less spot contracts, which allows LSC to be less
exposed to the volatile and rising price of fuel.
Over the past 9 months LSC has made significant progress - the
company has managed to maintain gross profit margin (9 M 2010 –
14.4 million LVL; 9 M 2011 – 14.3 million LVL) with substantially
fewer ships operating. Also there are now no middle men any
longer taking any margin from the LSC.
Because LSC has fewer older ships it has managed to streamline
many costs associated with managing the fleet which is demonstrated
by the reduction in net income losses (pre-exceptionals) from 2010
(9 M 2010 – 13.8 million LVL) versus 2011 (9 M 2011 – 8.8 million
LVL).
Significant additional admin expenses were experienced in 2010
versus 2011 in remunerating the Board – a cost that has been
reduced significantly in 2011 by 5 million lats. In 2011 most of
LSC admin expenses relate to legal expenses in relation to previous
management’s actions.
A major highlight for Q3 2011 was the LVL 6.4 million
impairment charge suffered by LSC. This is mainly due to the
covenants of LSC’s bank lenders which have requested LSC to
maintain a minimum cash balance. Due to LSC falling cash balances
the lending banks have requested the company to sell 3 of the
oldest K class vessels which LSC is currently actively
pursuing. The impairment charge therefore arises due to an
accounting rule which demands LSC recognise a valuation loss on
assets that are now held for re-sale – not held on a long term
trading basis. Therefore LSC is obliged to recognise such a
non-cash loss in Q3 of 2011, a direct result of maintaining a
minimum cash position with LSC’s lending banks.
Most recently LSC has taken delivery of 2 new ships in June
and July this year which have been contracted out on long term
contracts - 2011 was not an ideal time to be taking on new ships
however these two ships were ordered back in 2007 by the previous
management and significant deposits were paid at the inception and
during their build. Therefore LSC was economically obliged to
complete these purchases.
For LSC 2011 has been significant in contracting out most of
its ships on long term contracts which made them much more
predictable as revenue earners.
Additional information:
Ilze Nagla
Public Relations Manager
JSC “ Latvijas kuģniecība”
Tel .: +371-29267454, +371-67715914
e-mail: ilze.nagla@vnafta.lv
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