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.
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.
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