Lauritzen hit by contract partner default
SHIPPING: J. Lauritzen was hit hard by contract partner default and writedowns in the first half of 2012, resulting in a net loss of 68m dollar, against a profit of 3.6m in the first half of last year.
“J. Lauritzen was exposed to a difficult start to 2012. Continued slowing of world
economic activity and surplus capacity in key shipping markets dented JL’s result. Additionally, J. Lauritzen was hit by contract partner default with the effect that a capesize bulk carrier was sold. This caused a net loss of 39m dollar, which had a significant negative impact on our result for the first half of 2012”, says Torben Janholt, President and CEO.
EBITDA was USD 65.0m for the first six months of 2012 (USD 65.4m in 2011), which was in line
with expectations. Operating income was USD (34.8)m compared to USD 29.6m in 2011 and below expectations
mainly due to losses totaling USD (46.3)m related to the sale of assets.
Continuous downward adjustments of the world economic forecasts and surplus capacity have reduced the expected earnings on open ship days for the balance of 2012. The consolidated EBITDA for the full year is thus expected at a level of around USD 100m.
EBITDA in the second half is expected to be lower than in the first six months of the year and thus lower than earlier expectations of approximately USD 60m. Additionally, the sale of 50% of the offshore
accommodation activities will reduce EBITDA.
“In general vessel values have dropped during the first half of 2012. Based on JL’s contract cover and estimated freight rates JL’s value in use of the fleet is higher than market values and higher than book values. However, due to the world economic uncertainty and increased geopolitical uncertainty, especially in the Middle East, our rate scenarios may change into a prolonged period
with further low dry bulk markets, in which case a need for write-downs at year-end 2012 of own
vessels and vessels on long-term time-charter would materialize”, the management states.
• Lauritzen Bulkers
The dry bulk market was hit by weakening demand growth due to weather disturbances,
reluctance to replenish stores due to anticipated commodity price declines and large newbuilding deliveries.
Total number of ship days increased to 20,623 up 21% compared to 16,980 in the first half of 2011. EBITDA was USD 10.6m compared to USD 26.4m in 2011 and operating income was USD (53.1)m compared to USD 17.1m in 2011. The
decline was primarily due to difficult market conditions and loss on sale of assets.
• Lauritzen Kosan
The contract and petrochemical spot trades for smaller gas carriers remained healthy during the first half despite challenges in relation to the Iran sanctions, the fiscal situation in Europe and the US as well as slowing of demand growth towards the end of the period.
Total number of ship days was 7,608 up 10% compared to 6,887 in the first half of 2011.
EBITDA was USD 20.8m compared to USD 17.9m in 2011 and operating income was USD 7.2m compared to USD 5.3m in 2011. The improvement was due to market improvements, increased long-haul shipments of e.g. butadiene and a slightly larger fleet of fully pressurized gas carriers.
• Lauritzen Tankers
The normal seasonal weakening of the market for medium range product tankers in the second quarter was more pronounced than anticipated.
Total number of ship days was 2,273 up 12% compared to 2,034 in the first half of 2011. EBITDA was USD 7.5m compared to USD 6.8m in 2011 and operating income was USD 3.0m compared to USD 4.4m in 2011. The decline was mainly related to slightly lower markets and increased depreciations due to increase of own fleet.
• Lauritzen Offshore
The market for offshore service vessels continued its positive trend as deep water oil exploration and production as well as maintenance of offshore installations gained further momentum. Total number of ship days was 719 compared to 342 in the first half of 2011.
EBITDA was USD 28.8m compared to USD 18.7m in 2011 and operating income was USD 10.8m compared to USD 7.2m in 2011. Results were in line with expectations and reflect that two shuttletanker newbuildings have been added to the operational fleet. Operating income includes USD (6.9)m impairment related to the establishment of the aforementioned 50/50 joint venture, mainly due to expense of amortized loan costs and unused tax assets.
Source: J. Lauritzen
