Hellenic Carriers Limited reports 2011 Interim Unaudited Results
Press Release 12 September 2011
Hellenic Carriers Limited, (“Hellenic” or the “Company”) (AIM: HCL), an international provider of marine
transportation services, which owns and operates through its wholly owned subsidiaries a fleet of five dry bulk vessels
that transport iron ore, grain, steel products and minor bulk cargoes, is pleased to report today its Interim Unaudited
Results for the six months ended 30 June 2011.
The Company’s management will be holding a conference call and webcast today at 1.30pm (BST), 3.30pm (Athens)
and 8.30am (EDT).
Financial Highlights
• US$20.8 million Revenue (H1 2010: US$30.6 million)
• US$12.2 million EBITDA1 (H1 2010: US$20.2 million)
• US$5.5 million Operating Profit (H1 2010: US$12.8 million)
• US$3.1 million Net Income (H1 2010: US$10.0 million)
• Earnings per share of US$0.07 (H1 2010: US$0.22)
• Cash reserves2 of US$49.1 million as of 30 June 2011 (US$60.0 million as of 31 December 2010)
• US$94.5 debt balance as of 30 June 2011 (US$105.3 million as of 31 December 2010)
• Gearing Ratio3 of 26.6% as of 30 June 2011 (26.5% as of 31 December 2010)
• Signing of loan agreements for the financing of the two new-building Kamsarmax vessels
• Operation of a fleet of an average of 5.0 vessels during H1 2011 compared to an average of 6.0 vessels in H1 2010
• Time Charter Equivalent rate of US$21,397 (H1 2010: US$26,589) outperforming the Panamax and Supramax industry average Time Charter earnings of H1 2011 (US$14,254 and US$14,476 respectively)4
• Fleet utilization of 99.2% (H1 2010: 99.0%)
Management Commentary
Fotini Karamanli, Chief Executive Officer, commented: “Since early 2011 the dry bulk market has been subjected to considerable downward pressure resulting in poor freight rates, especially in the capesize sector. The dry bulk market is now experiencing the effects of oversupply of vessels, mainly ordered during the boom years. This development comes as no surprise since the overhang of the order book was causing concerns for a number of years. However, in this depressed environment there are positive signs which we should not fail to consider.
“The most important is that demand remains robust with the developing countries in the East achieving impressive growth rates and hence importing significant volumes of raw materials. Should it not be for this strong demand and given the number of new vessels entering the market, the freight levels would undoubtedly be much lower. The second positive factor is the considerable increase in scrapping activity whilst scrap prices remain at very high levels. We should not forget that around 20% of the current fleet is over 20 years of age. Last but not least, the financial crisis which has a knock on effect limiting the liquidity available for the construction of new vessels. All these factors bear significance for the future of the dry bulk market.
“Against this climate, Hellenic is pleased to report healthy financial and operational results for H1 2011. During the period in question, some of the vessels continued to generate strong cash flows from charter agreements entered into prior to the market downturn. Since these charters have come to an end, we have traded the vessels in the spot market, avoiding long term commitments at low rates. However there will be volatility in the freight market, hence triggering opportunities for longer term fixtures.
“Due to the lucrative charters mentioned above, the company has accumulated reserves which will not only assist our operations in challenging times but also enable us to take advantage of acquisition opportunities as they arise. In 2010 we took advantage of the strong market and sold one of the older units, whilst at the same time placing orders for two new-building Kamsarmax vessels.
“We plan to continue with our fleet renewal program acting prudently and aiming to maximize long term value for all our shareholders.”
Fleet Developments
As at the date of this release, the Company owns and operates through its subsidiaries a fleet of five dry bulk carriers including three Panamaxes, one Supramax and one Handymax with an aggregate carrying capacity of 303,141 dwt and a weighted average age of 15.9 years. In addition, subsidiaries of the Company have placed orders for the construction of two Kamsarmax vessels with an aggregate carrying capacity of about 164,000 dwt.
Following the delivery of the two Kamsarmax vessels scheduled for Q1 2013, the fleet will expand to seven dry bulk vessels with an aggregate carrying capacity of about 467,141 dwt and a weighted average age of 12.5 years (as of 31 March 2013).
Interim 2011 Results
During the six months ended 30 June 2011, Hellenic through its subsidiaries had in operation an average of 5.0 in comparison to 6.0 vessels during the six months ended 30 June 2010. The 1993 built Panamax vessel M/V Hellenic Breeze was sold in August 2010. As a consequence fleet ownership days dropped by 16.7% to 905 from 1,086 reported for the first half of 2010.
For the six months ended 30 June 2011, Hellenic reported revenues of US$20.8 million compared to US$30.6 million for H1 2010. The reduction in revenue is partly attributable to the decrease in the number of vessels operated but is also a result of the depressed dry bulk freight rates. We note that between 30 June 2010 and 30 June 2011, the Baltic Dry Index (BDI) declined by 41.3% from 2,406 to 1,413.
In this environment, Hellenic benefited from the continuation of charters agreed prior to the market downturn in Q4 2008, namely the M/V Konstantinos D charter at US$35,000 gross per day which terminated in mid January 2011 and the M/V Hellenic Wind charter at US$54,000 gross per day. The latter charter terminated in mid April 2011, one month earlier than the contractually agreed redelivery date, however charterers Messrs Hanjin Shipping Co Ltd. have already compensated the Owners by paying for the damages resulting from the early redelivery of the vessel. The vessel has since been trading in the spot market.
During the same period the M/V Hellenic Sea was employed under the SetSea charter (at a gross daily rate of US$23,300), which terminated in March 2011, a month earlier than the agreed redelivery date. The charterers have already compensated the Owners by paying the relevant amount of damages for early redelivery. The vessel has since been trading in the spot market.
The other vessels are all trading in the spot market for the performance of single or consecutive laden legs. The long term commitment of the vessels has been avoided due to the depressed current market levels. During the first half of 2011 the vessels earned an average TCE of US$21,397 per vessel per day compared to US$26,589 per vessel per day during the corresponding period of 2010.
The fleet utilization for H1 2011 was 99.2% compared to 99.0% for H1 2010.
Voyage expenses in H1 2011 amounted to US$2.1 million compared to US$3.3 million in H1 2010, a decrease of about 36.4%, which is in line with the reduction in revenue and fleet size.
As a result of the decrease in ownership days, vessel operating expenses for H1 2011 dropped by US$0.5 million to a total of US$4.9 million. On a per day basis operating expenses increased by 9.4% from US$4,910 in H1 2010 to US$5,370 in H1 2011.
The Company’s general and administrative expenses in H1 2011 were US$1.0 million, in line with H1 2010.
EBITDA generated amounted to US$12.2 million compared to US$20.2 million for H1 2010, a decrease of 39.6% and net income was US$3.1 million compared to US$10.0 million for H1 2010, a decrease of 69.0%.
Basic and diluted earnings per share calculated on 45,616,851 weighted average number of shares were US$0.07 for H1 2011 compared to earnings per share of US$0.22 for H1 2010.
Debt / Financing Activities & Capitalisation
In 2010, following the signing of the shipbuilding contacts for the construction of the two Kamsarmax vessels, the Company paid advances to the yard representing 40% of the vessels’ contract price. In H1 2011, loan agreements were signed by two subsidiaries of the Company with Credit Agricole Corporate and Investment Bank securing financing of up to 65% of each vessel’s value upon delivery or maximum US$22.1 million per vessel. Such amounts shall be drawn down upon delivery of each new-building from the yard to the respective owning company. Hence, final commitments payable to the yard upon delivery of the vessels in Q1 2013 have been secured.
In terms of principal instalments, during the first six months of 2011, the Company and its subsidiaries paid to their lenders the aggregate amount of US$6.2 million representing regular instalments and an additional amount of US$4.7 million calculated on the excess earnings of the fleet for previous periods.
Debt balance as of 30 June 2011 was US$94.5 million compared to US$105.3 million on 31 December 2010. The remaining scheduled principal repayments until the end of 2011 is US$6.2 million. Unencumbered cash balance at 30 June 2011 was US$44.0 million compared to US$59.0 million at 31 December 2010.
Restricted cash reported at 30 June 2011 was US$5.1 million. Out of this amount, US$1.7 million represents funds held in retention account for the repayment of the next debt instalment and interest due under one of the existing loan agreements. The amount of US$3.4 million is retained against issuance of a Bank Guarantee of US$3.1 million provided to Setsea SpA, the ex charterers of the vessel M/V Hellenic Sea as security, pending the outcome of the arbitration proceedings already commenced in London between Owners / Charterers / Sub-charterers on the occasion of vessel’s accident in the Amazon River in July 2010. Input from legal advisors is supportive to Owners’ position, therefore, as of date, the Company has not recorded a provision in the interim financial statements.
Net debt as of 30 June 2011 was calculated at US$45.4 million in line with net debt as of 31 December 2010 and the Company’s gearing ratio1 remains stable at 26.6% compared to 26.5% on 31 December 2010.
With respect to the accident of the M/V Hellenic Sea in the Amazon River in July 2010, the Adjustment of Owners’ claim of US$3.5 million is being processed. No dry-dockings were performed in H1 2011.
Dividend
Further to AGM’s approval, the final dividend for 2010 in the total amount of GBP 2,486,118 or GBP 5.45 pence per share was paid on 20 May 2011 to the shareholders on record as of 26 April 2011.
The Directors of the Company do not recommend an interim dividend payment for 2011 in order to reinforce the Company’s liquidity in a depressed market and optimize the use of cash when market opportunities arise. A decision with regard to the recommendation of a final dividend will be taken prior to the announcement of the year ended 31 December 2011 results.
About Hellenic Carriers Limited
Hellenic Carriers Limited manages through Hellenic Shipmanagement Corp. a fleet of dry bulk vessels that transport iron ore, coal, grain, steel products, cement, alumina, and other dry bulk cargoes worldwide. The fleet consists of five vessels, comprising three Panamaxes, one Supramax and one Handymax with an aggregate carrying capacity of 303,141 dwt and a weighted average age of 15.9 years plus two new building vessels currently on order, both Kamsarmaxes with an aggregate carrying capacity of about 164,000 dwt.
Following the delivery of the two Kamsarmax vessels, the Company will manage through Hellenic Shipmanagement Corp. a fleet of seven dry bulk carriers comprising two Kamsarmaxes, three Panamaxes, one Supramax and one Handymax with an aggregate carrying capacity of about 467,141 dwt and a weighted average age of 12.5 years (as of 31 March 2013).
Hellenic Carriers is listed on the AIM of the London Stock Exchange under ticker HCL.
Detailed report at: www.hellenic-carriers.com
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1 EBITDA has been calculated as follows: Operating profit + Depreciation + Depreciation of dry-docking costs
2 Cash reserves comprise of unencumbered cash + restricted cash
3 Gearing ratio is defined as Net Debt to total capitalization (debt, net of deferred financing fees less cash and cash equivalents to net debt and stockholders’ equity)
4 Source : Howe Robinson
Hellenic Carriers Limited press release