Excel Maritime Carriers Ltd. (EXM), a transporter of raw commodities including iron ore and coal, said second-quarter profit fell 37 percent as shipping demand weakened during the global economic recession.
Net income fell to $78 million, or $1.05 per share, from $123.6 million, or $3.06 a share a year earlier, Athens-based Excel said in a statement today. The company was expected to earn $1.10 a share, according to the average of three analyst estimates compiled by Bloomberg. Sales fell 15 percent to $173.9 million from $205.5 million.
The Baltic Dry Index, a measure of shipping costs for commodities, dropped 72 percent from a year earlier as the recession cut global trade. Having more ships on fixed-rent time charters than on single-voyage, or spot, contracts helps secure revenue.
“They have a certain amount of exposure” to spot rates, with about one-third of the fleet not on multiple-voyage, time-charter contract, said Charles Rupinski, a New York-based analyst at Maxim Group who has a “hold” rating on the shares. “They’re not as locked in.”
Excel fell $1.17, or 12 percent, to $8.73 in New York Stock Exchange composite trading. The shares have risen 24 percent this year.
Excel had an interest-swap gain of $14.3 million. Excluding the gain, profit was $63.7 million, or 86 cents a share. Profit a year ago included an interest-rate swap gain of $22.8 million. Excluding the gain, year-ago profit was $100.8 million, or $2.50 per share.
Prices posted by the Baltic Exchange are used in financial instruments linked to weather or other factors, and to settle cost-of-shipping derivatives and hedge risks for speculation.
On April 1, Excel said it renegotiated its bank loans after breaching loan covenants because the value of its vessels dropped when the shipping market declined. The Baltic Dry Index, a measure of shipping rates, fell 92 percent last year. The shipowner also issued $45 million in new equity.
Excel ships earned an average daily rate of $22,148, a decrease of 34 percent from $33,325 a year earlier. The company operated 47 ships in the quarter, up from 42.
Excel “has potential for a lot of upside, but you need a sustained, big rate rally,” Rupinski said. “Excel is a high-risk, high-reward play in the group.”
The shipowner said two thirds of the fleet’s remaining 2009 operating days are under time charter, and 53 percent in 2010.
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