GE Shipping net up 2%

BS 200 SCORECARD

Great Eastern Shipping Company's net profit rose 1.82 per cent to Rs 165.85 crore for the third quarter ended December 31, 2006 from Rs 162.88 per cent for the corresponding quarter of the previous financial year.

For the quarter under review, the company's income from operations fell 16.41 per cent to Rs 519.85 crore from Rs 621.94 crore for the quarter ended December 31, 2005.

The growth in the third-quarter profit was mainly owing to increased earnings of term contracts that entered in the first and second quarters, coupled with high dry bulk earnings and higher treasury yields. On the expenditure side, lower repairs and maintenance costs on account of dry docking, lower interest and depreciation expenses provided support.

The company declared a second interim dividend of Rs 3 a share on a paid-up equity share capital of Rs 152.27 crore, which will result in an outflow of Rs 52.09 crore including tax on dividend. This, along with the first interim equity dividend of Rs 4 a share declared in October 2006, resulted in a total outflow of Rs 121.54 crore including tax thereon.

During the quarter, GE Shipping subscribed 2.5 crore shares of Rs 10 each at a premium of Rs 90 a share by way of preferential allotment aggregating to Rs 255 crore in its wholly owned subsidiary and offshore arm Greatship (India).

The company's operating profit, excluding the gain from sales of ships, increased 11.6 per cent to Rs 252.95 crore for the reporting quarter against Rs 226.64 crore for the corresponding quarter last year. The gain from sales of ships in the quarter ended December 31, 2005 stood at Rs 124.04 crore, while it was nil in the quarter under review.

For the December 2006 quarter, revenue days (including inchartering days) at 3,683 were lower by around 4.4 per cent compared with 3,851 days in the corresponding quarter of the previous year, while owned tonnage at 2.92 million dead weight tonne (dwt) was higher by around 4 per cent y-o-y.

During the quarter, GE Shipping took delivery of a 1996-built Suezmax crude carrier "� Jag Layak. It also contracted to buy a 1994-built geared Panamax drybulk carrier and a 1988-built product tanker both scheduled to be delivered during Q4 of 2006-07.

During January this year, the company took delivery of a new built medium range (MR) product tanker "� Jag Panna "� and also contracted to sell Jag Padma "� a 1982-built MR product tanker "� scheduled to be delivered during the current quarter.

GE Shipping's current fleet of 41 vessels comprises 32 tankers and nine drybulk carriers with an average age of 13.1 years aggregating 2.96 million dwt.

Its committed capex at around $450 million includes a new building order-book of eight product tankers with deliveries spread over the next three financial years starting this quarter (Q4FY07) and three second-hand ships "� one capesize, one geared Panamax and one product tanker "� all to be delivered during Q4FY07.

The company said, in its business outlook, the next round of OPEC cuts on the back of new building deliveries and low scrapping levels is expected to put further pressure on the tanker markets.

However, the change in weather in the US and Europe and the increase in tone-mile demand driven by non-OECD countries could further tighten the demand-supply equation.

In its company outlook, as on January 25, 2007, for the remaining part of FY07, crude oil tankers, product tankers and dry bulk carriers are covered to the extent of around 65 per cent, 80 per cent and 50 per cent of the operating days, respectively.

This has resulted in revenue visibility of around Rs 250 crore.