Excel Maritime Profit Falls 47% on Lower Voyage Rates

Excel Maritime Carriers Ltd. (EXM), a shipper of raw commodities including iron ore and coal, said third-quarter profit fell 47 percent as demand for vessels declined.

Net income decreased to $62 million, or 79 cents a share, from $117.6 million, or $2.66, a year earlier, Hamilton, Bermuda-based Excel said in a statement today. The company was expected to earn 93 cents a share, according to the average of six analyst estimates compiled by Bloomberg. Sales fell 25 percent to $174.4 million from $231.7 million.

Spot, or one-voyage, rates on the Baltic Dry Index, a measure of shipping costs on international trade routes, fell 61 percent in the quarter from a year earlier as a global recession cut demand for shipments in Europe, Japan and South Korea.

“They have a lot of the fleet on spot, and the fact of the matter is the spot market was disastrous for a lot of the quarter,” said Charles Rupinski, a New York-based analyst at Maxim Group LLC who has a “hold” rating on the shares. About one-third of the fleet was operating in the spot market or coming off lease agreements in the third quarter, according to Rupinski.

Excel rose 32 cents, or 5.8 percent, to $5.82 in New York Stock Exchange composite trading. The shares have fallen 17 percent this year. The company released its earnings after U.S. stock markets closed.

Interest-Rate Swaps

Results included a $1.8 million loss from interest-rate swaps. Excluding that item, profit was $63.8 million, or 81 cents. Year-ago net income included an interest-rate swap loss of $6.7 million. Excluding that item, profit was $124.3 million, or $2.81 per share.

Excel’s ships earned an average daily rate of $21,912, a 35 percent decrease from $33,806 a year earlier. The company operated 47 ships in the quarter, the same as a year ago.

“My impression is they’re going to keep a lot on spot,” Rupinski said. “They’re not going to be locking in a lot, they’re going to be flexible on keeping the fleet open” for potential increases in rates, he said.

Excel said 69 percent of fourth-quarter operating days are under charter and 54 percent for 2010.

In August the shipowner issued an additional 6 million shares at $8 each to raise $45.1 million to pay down debt and improve cash reserves.

Ships on order will place additional pressure on rates by increasing the supply available to charterers. The global dry-bulk fleet’s capacity is due to expand by about 3,273 ships, or 65 percent, in the next five years, London-based Drewry Shipping Consultants Ltd. said in a report earlier this month.

(Excel will hold a conference call for investors and analysts at 10 a.m. New York time tomorrow. It is available by calling 866-819-7111 or via the company’s Web site at http://www.excelmaritime.com)

To contact the reporter on this story: Todd Zeranski in New York at tzeranski@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.