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Pacific Basin Annual Profit Slumps 69% on Lower Dry-Bulk Rates

March 1 (Bloomberg) -- Pacific Basin Shipping Ltd., Hong Kong’s largest operator of dry-bulk vessels, posted a 69 percent drop in annual profit because of lower rates and a write-off of vehicle-carrying ships.

Net income was $32 million last year, compared with $104.3 million in 2010, Pacific Basin said in a stock exchange filing today. That compares with the $28.3 million average of seven analyst estimates compiled by Bloomberg. Sales rose 6 percent to $1.34 billion.

Dry-bulk shipping is in “crisis” and freight rates will probably be lower industrywide this year than in 2011 because of overcapacity and global economic uncertainties, Pacific Basin said. The Baltic Dry Index, a benchmark for commodity freight rates, has slumped 54 percent this year.

“I haven’t seen any sign of pick-up in BDI,” said Lawrence Li, a Shanghai-based analyst with UOB-Kay Hian Holdings Ltd. “The coming year or two will be tough.”

The company proposed to pay a final dividend of 5 HK cents. The shares closed unchanged at HK$4.04 in Hong Kong trading before the earnings announcement. They have dropped 15 percent in the past year compared with an 8.6 percent decline for the city’s benchmark Hang Seng Index.

The company will name a new chief executive officer by the end of this month, replacing Klaus Nyborg who will leave on March 15, it said in a separate statement.

The ship operator is awaiting opportunities for expanding its dry-bulk fleet. As of Dec. 31, it had $618 million of cash and deposits while net borrowings were $161 million, it said.

The carrier has contracts covering 54 percent of its 2012 Handysize revenue days at $11,480 per day, it said. That compares with daily earnings of $13,530 last year. For 2013, 25 percent of Handysize days are covered at $12,920 a day.

RoRo Ships

The company’s vehicle-carrying vessels posted a $10.6 million loss last year and the unit will also probably be unprofitable in 2012, according to the statement. The company wrote off $80 million of investments in the so-called roll-on, roll-off ships during the first half of last year.

Pacific Basin has a fleet of 218 vessels, including those on order, it said in the statement.

To contact the reporters on this story: Jasmine Wang in Hong Kong at Jwang513@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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