Hellenic Carriers reports 2012 interim unaudited results
H1 2012 Financial Results
Press Release 6 September 2012
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 three dry
bulk vessels that transport iron ore, grain, steel products and minor bulk cargoes, reports today its Interim
Unaudited Results for the six months ended 30 June 2012.
The Company’s management team will be holding a conference call and webcast today, at 2pm (London),
4pm (Athens) and 9am (New York) to discuss the results.
H1 2012 FINANCIAL AND OPERATIONAL HIGHLIGHTS
• EBITDA1 US$0.5 million (H1 2011: US$12.2 million)
• Operating Loss US$4.8 million before non-cash items (H1 2011: US$5.5 million Operating Profit before non-cash items)
• Net Loss US$7.3 million excluding non-cash items (H1 2011: US$3.1 million Net Income excluding non-cash items)
• Non-cash impairment charge US$4.1 million (H1 2011: US$ nil)
• Non-cash gain on sale of vessel US$2.3 million (H1 2011: US$ nil)
• Gearing ratio2 at 28.6% as of 30 June 2012 (30.2% as of 31 December 2011)
• Total cash, including restricted cash of US$50.9 million as of 30 June 2012 (US$48.0 million, as of 31 December 2011)
• Reduction of Gross debt to US$84.9 million on 30 June 2012 (US$88.2 million on 31 December 2011) resulting in a net debt position of US$33.9 million as of 30 June 2012 (US$40.1 million as of 31 December 2011)
• Time Charter Equivalent rate of US$8,338 (H1 2011: US$21,397) in line with market average earnings for the period
• Operation of a fleet of 4.8 vessels on average compared to 5.0 vessels in H1 2011
Management Commentary
During H1 2012, a particularly challenging period for the dry bulk shipping market, management took certain steps to set the foundations for the Company’s future development. In particular, we sold the two older vessels of the fleet, namely the M/V Hellenic Sky and the M/V Hellenic Sea, for a total consideration of US$15.4 million. Furthermore, we secured from our lenders the option to use such sale proceeds within 2013 as debt financing towards the acquisition of modern second hand bulk carriers. Last, but not least, we extended the term of the current loan facilities thereby significantly lightening the principal installments due henceforth.
The results of the strategy adopted are twofold. On the one hand we facilitate cash preservation amidst an environment of depressed returns and limited liquidity. On the other hand, we secure financing for the acquisition of second hand ships within an extended time frame, at levels which are approaching the last decade’s lows and during times when bank debt is either unavailable or offered on the basis of very unfavorable terms. We believe that the expansion of the fleet through the acquisition of attractively priced ships prepares the Company for the next cycle and enhances its future profit generation capacity.
We decided to act in the pre-emptive manner described above, since in our opinion the dry bulk market will continue to be challenging in the medium term. The current market levels are justified when the constant inflow of new buildings against a softening global economy is taken into account. Both of these factors are not expected to subside in the near future. It will take some time before the new tonnage is absorbed, while scrapping of the older fleet continues. And although demand for dry bulk commodities from the developing countries remains solid, the prospects of the mature economies are uncertain and may temporarily affect the growth potential of the emerging economies.
However, we should not lose sight of the positive signs for the future of our market. The developing economies still have a long way to go until they meet their targets in order to improve the living conditions of their populations. This means continued need for imports of raw materials. The dry bulk fleet, although expanded and renewed during the last 4 years, still encompasses a significant percentage of over aged ships, which are bound to be scrapped. At the same time, limited and expensive credit has a dampening effect on new orders for dry bulk vessels.
In this environment our Company has taken steps towards the right direction. We are well positioned not only to endure the challenging market conditions, but also to take advantage of the real opportunities which will arise in order to expand our fleet and enhance shareholder value.
1 EBITDA has been calculated as follows: Operating profit + Depreciation + Depreciation of dry-docking costs + Impairment charge - Gain on sale of vessel
2 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)
Fleet Developments
On 16 May 2012, Thasos Shipping Co. Ltd. (“Thasos”), the ship owning company of the M/V Hellenic Sky completed the sale of the 68,591 dwt Panamax vessel built in 1994 at Sasebo Heavy Industries in Japan. The M/V Hellenic Sky was sold to an unaffiliated third party at a price of US$10.1 million.
The vessel was acquired in July 2003 at a price of US$13.2 million. During the past nine years of its operation, the vessel contributed approximately US$19.4 million to the Company’s net profit. Taking into account the net book value of the vessel and the sale related expenses, the Company realised a net book gain of approximately US$2.3 million on this sale.
Subsequent to the period ended 30 June 2012, the 65,434 dwt Panamax dry bulk carrier, M/V Hellenic Sea, built in 1991 at Jiangnan Shipyard in China, was sold to an unaffiliated third party for a total cash consideration of US$5.3 million. The vessel was delivered to the buyers on 23 August 2012.
The vessel was acquired in March 2002 at a price of US$9.6 million. During the past ten years of its operation, the vessel contributed approximately US$40.6 million to the Company’s net profit. Taking into account the vessel’s net book value and expenses related to the sale, the Company expects to realise a net book loss of approximately US$0.2 million on this sale.
The Company’s intention is to use the proceeds from the sale of the two vessels towards future acquisition opportunities in the dry bulk sector. In particular, the lenders of M/V Hellenic Sky and M/V Hellenic Sea have agreed to transfer the proceeds from the sale as bank financing towards the acquisition of modern second hand bulk carriers, within a period of 18 months and 12 months from the vessels’ delivery to the buyers respectively.
Further to the above mentioned sale, as at the date of this release, the Company owns and operates through its subsidiaries a fleet of three dry bulk carriers comprising one Panamax, one Supramax and one Handymax with an aggregate carrying capacity of 169,116 dwt and a weighted average age of 15.2 years.
Full report at: www.hellenic-carriers.com
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 three vessels, comprising one Panamax, one Supramax and one Handymax with an aggregate carrying capacity of 169,116 dwt and a weighted average date of 15.2 years plus two new building vessels currently on order, both Kamsarmaxes with an aggregate carrying capacity of about 164,000 dwt.
Hellenic Carriers is listed on the AIM of the London Stock Exchange under ticker HCL.
Hellenic Carriers Limited press release