Latvian Shipping Company’s losses have decreased by 26% in 2012

February 28, 2013

Latvian Shipping Company and its subsidiaries (hereafter – LSC, LSC Group or Group) unaudited financial statements for 2012 show improvement of Group’s financial results compared to 2011 – losses have decreased by 26 % and were USD 35.67 million. The financial result for Q4/2012 was a net loss of USD 0.10 million. This is the first time since 2008 when the Group’s performance has been close to break-even.

The total income of the fleet in 2012 was USD 114.71 million which is an 18.7% increase compared to 2011 when the total income was USD 96.60 million. This increase reflects the fact that a larger number of the fleet was employed on the spot market where the income can be higher and slowly improving chartering rates. Charter rates for handy size vessels have improved in 2012 by 13% (Y 2011 to Y 2012) and for medium-sized vessels by 2%. However charter rates for the only long range vessel leased by LSC have continued to decrease year by year and in 2012 – by 11%.

Simon Blaydes, Chairman of the Management Board of LSC explains “Despite this improvement in LSC’s financial results the worldwide shipping market remains very challenging. LSC’s core area of expertise, the handy size and medium range product tanker market, has been the least affected by the shipping downturn as compared with other sectors of the tanker market and shipping markets in general. The reasons for this are varied but the main factors are that the products tanker segment has a much greater degree of flexibility in terms of voyage routes and variety of cargo products. LSC Group’s fleet is attractively placed within this segment as nineteen vessels within its fleet are ice classed which provides a wider trading range and all have the additional ability to load vegoils/palm oils as well as standard petroleum products.”

The weak shipping market throughout 2012 resulted in recognizing a considerable impairment of the fleet. In total there was a decrease in the fleet’s value in the amount of USD 28.24 million in 2012. The impairments are non-cash items, thus they do not affect the cash position of the Group. LSC Group’s cash position at the end of December 2012 was USD 26.13 million.

“LSC does not expect to see a dramatic improvement in the shipping market throughout 2013. The markets are still suffering, to some extent, from the weak economic environment especially within the EU/USA and the after effects of the extensive product tanker new building programme in previous years. However looking to the future there are more optimistic signals that bode well for the product tanker sector with increased demand for refined products in South America, Africa, Australia due to refinery closures there and the USA becoming an exporter of refined products,” Simon Blaydes forecasts operational environment of the company.

At December 31, 2012 the total value of LSC Group assets was USD 605.36 million.

About Latvian Shipping Company
In the medium-sized and handy tankers category JSC Latvian Shipping Company (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. The company 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 6.5 years. All ships have received ISM (International Safety Management) certificates.

Latvian Shipping Company press release