Fourth quarter hit by shipping crisis

11 Jan, 2010

Eitzen Maritime Services ASA (OSE: EMS) today reported its fourth quarter and full year 2009 results. The fourth quarter results reflect the current shipping crisis and are also hit by a write-down of goodwill in the group's ship management division. The ship supply division is however withstanding the margin pressure in the industry and is posting positive EBITDA for the quarter.

EMS posted sales of USD 136.0 million in the fourth quarter, an increase from the previous quarter (up USD 11.6 million) and from the fourth quarter in 2008 (up USD 10.0 million). The Company estimates that the merchant fleet ship supply market has dropped by more than 30 per cent as a result of the crisis and the industry is currently experiencing a heavy margin pressure. Also the ship management segment is going through turbulent times. Restructuring of the ship management division and a USD 9.4 million write down of goodwill add to weak fourth quarter results.

EBITDA for EMS came in at USD -2.8 million for the fourth quarter and the group's net result ended at USD -18.3 million.

For the full year, EMS' revenues were USD 511.3 million, which represent a 25 per cent growth from the previous year. EBITDA for 2008 came in at USD 12.4 million. Net result for the year ended at USD -19.9, including depreciation and write-offs totalling USD 19.9 million.

"In the fourth quarter the shipping crisis coincided with a number of operational and internal factors which in total gave a weak result for the period. Our focus is now on further improving operational efficiency and quality of operations, in order to perform as good as possible under the current market conditions," said CEO Annette Malm Justad.

The ship supply division has over the last couple of years grown into the global leader in ship supply. The portfolio has also become more robust, with a strong presence in the military and offshore segments in addition to the world's merchant fleet and other maritime segments which currently experience margin pressure. For the full year, EMS Ship Supply posted despite margin pressure an EBITDA margin of 3.8 per cent and enjoys a steady order flow and a strong order backlog.

The ship management division completed the shut-down of its European hub in the fourth quarter and is now operating out of the two remaining hubs in Asia The division also recently experienced an incident with one of the vessels under its operation. Also, the fleet under EMS management has been reduced over the last months. These events combined led to EMS Ship Management posting a negative EBITDA for the fourth quarter as well as for the full year.

"The outlook for the shipping industry remains uncertain. While we do not underestimate the seriousness of the situation, we also see a number of positive factors going forward. We have a well balanced customer portfolio, an attractive order backlog and a number on initiatives aimed at improving operational efficiency and reduce costs are taking effect," Annette Malm Justad said

Eitzen Maritime Services ASA