Great Eastern Shipping Company Results

Great Eastern Shipping Company would have ended the first quarter ended 30th June 2008 on a high note, but for the exceptional item which spoilt the party! The total income of the company, YoY, rose 14% at Rs.992 crore. Freight and charter hire income was higher by 10%. Average earnings from crude carrier rose 38%, while dry bulk earnings increased by 78%. Profit booked from sales of some of the older ships was also significantly higher at Rs 253.92 crore. The Average Time Charter Yields (TCY) earned by the Company’s fleet in various Categories shows that 78% came from dry bulk, 38% from crude, 5% from gas carriers and there was actually a fall of 0.2% in the product carriers. Despite this, the net profit for current q1 was down 8% at Rs.387.59 crore. And all the blame for this fall in net profit lays fair and square on the exceptional item of Rs.138.57 crore. The company has explained in the Notes to the Accounts that pursuant to AS 11, the gains and losses arising from the effect of changes in the foreign exchange rates on repayments of loans and revaluation of the outstanding foreign currency loans including currency swaps relating to ships acquired from a country outside India were included under exceptional item. Looking ahead, the company has signed a contract to build two new Suezmax vessels with Hyundai Heavy Industries, to be delivered in 2011. The total capex of the company is about $779 million or Rs 3,350 crore as per current exchange rates. The company will be taking delivery of four Long Range product tankers of about 74,500 DWT each over the next nine months. This includes building 14 new vessels aggregating 1.17 million DWT (4 LR product tankers, 2 Suezmax crude carriers and 8 dry bulk carriers). Based on this committed expansion, the company’s fleet will be about 3.77 million DWT with an average age of 8.8 years by the end of 2011 as against a fleet of 2.85 million DWT with an average age of 10.6 years today. As on July 17, 2008, the company has state that its revenue visibility is around Rs.873 crore for the balance part of FY09. Crude tankers and product carriers are covered to the extent of around 50% and 54% of their operating days respectively. In case of dry bulk carriers they are covered to the extent of around 33% of the fleet’s operating days. Gas Carriers are covered to the extent of 100% of their operating days for the balance part of FY 09. The current fiscal looks good for the company. For over a month now, stock price has remained range bound at Rs.380 levels. Stay invested. source