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In 2011, the medium size tankers (12 MR type tankers with carrying capacity of 52 thousand tons) achieved an average charter rate of USD 12 882 per day which is an 8.7% increase compared with 2010. In turn the “handy” tankers (7 “handy” tankers with carrying capacity of 37 thousand tons each) achieved an average charter rate of USD 11 216 per day which is a 4.6 % increase on 2010. LSC has performed favourably in comparison with its shipping peers throughout 2011 and during the most recent quarter published - Q4 2011. The only tanker, for which the chartering rate has decreased within the last year, is the tanker “Riga” with carrying capacity of 68 thousand tons. It achieved USD 13,623 per day which is a 28% decrease on 2010. The decreased earnings on the Riga were a consequence of the vessel’s age (built in 2001) and also due to a lack of demand for such sized tankers in the current market. A similar tendency has also been reflected in the earnings of other shipping companies in this particular market sector due to less demand for long range product movements especially from eastern refineries to western economies. Paul Thomas, member of the Management Board of LSC observes that in recent years there has been a decline in demand for petroleum products, especially in the more developed Western economies, as well as an increase in the number of product tankers as a consequence of over ordering during the boom years of shipping. This has resulted in negative earnings for ship-owners. However the current management has succeeded in achieving an increase in chartering rates on a year to year basis. LSC has been able to improve earnings due to the shipping professionalism of members of the management board and all the dedicated professional staff of Latvian Shipping Company. Paul Thomas, member of the Management Board of LSC stresses: “The new management board is ensuring the company follows a strict policy of corporate governance. There is no longer any manipulation of chartering rates and the services of dishonest brokers have completely stopped”. Currently there is significant legal action being held in the UK courts in order to recover losses of USD 135 million caused by fraudulent charter schemes prior to and including 2005. LSC hopes to regain this money as a result of these legal proceedings in the next few years. Paul Thomas, member of the Management Board of LSC in the interview with Latvian Business daily Dienas business disclosed that in the short term the company will not be able to pay dividends as it has an unaudited consolidated loss of LVL 25 million in 2011. 
Explanations: HS = handy size, 37 dwt MR = medium range, 52 dwt LR1 = long range, 68 dwt net TCE = TIME CHARTER EQUIVALANT earnings after deduction of commissions payable by LSC to shipbrokers(s)/charterers, port costs, bunker costs and any other applicable voyage related costs. The above figures reflect combined earnings of fleet for both timecharters and spot market trading. About JSC “Latvijas kugnieciba” In the medium-sized and handy tankers category JSC „Latvijas kugnieciba” (NASDAQ OMX RIGA: LSC1R) is among the leading ship owners in the world, and in terms of transport volumes of petroleum products it is also in a leading position among similar companies in Northern Europe. It owns 20 modern ships, employing more than 700 professional and highly qualified seamen from Latvia. The total carrying capacity of the LK fleet is 957 974 DWT and the average age of the fleet does not exceed 5.5 years. All ships have received ISM (International Safety Management) certificates. Latvian Shipping Company press release |
LSC publishes chartering rates of its ships for the first time