Thoresen Thai Agencies Public Company Limited (TTA or the Company) has reported its 2009 Third Quarter results (for the period of 1 April-30 June 2009) with a net profit of Baht 352.62 million. TTA's net profit during the first nine months of 2009 equals Baht 1,348.90 million. The ability to achieve positive profitability during this economic downturn reflects TTA's diversified operations and well-timed business investment strategies.
M.L. Chandchutha Chandratat, Managing Director of TTA, announced that "For the 2009 Third Quarter, our total operating revenues were Baht 4,902.51 million, total operating expenses were Baht 4,214.55 million, and thus operating profits were Baht 687.96 million."
Cash and cash equivalents decreased by Baht 151.77 million during the 2009 Third Quarter. The Company generated cash of Baht 1,190.45 million from operating activities and used Baht 1,062.84 million mainly for investing purposes. Cash receipts of Baht 11.04 million were due to financing activities. The remaining Baht 290.42 million resulted from the effect of exchange rate changes.
During this quarter, investing activities originated mainly in Mermaid Maritime Plc (MMPLC), including instalments on the newbuild tender drilling rig, dive support vessels, and saturation diving system. The remaining capital expenditures are related to the accumulated dry-docking payments for both TTA and MMPLC. In addition, the Company sold a total of three vessels, generating Baht 232.69 million of cash, but with total accounting losses from the sales of Baht 35.09 million.
During the first nine months of 2009, TTA's net profits of Baht 1,348.90 million were contributed by different business segments as follows:
| Dry Bulk Shipping | 492.8 |
36.5% |
| Shipping Services | 164.9 |
12.2% |
| MMPLC (57.1% owned by TTA) | 333.2 |
24.7% |
| TTA (holding company and inter-company eliminations) | 358.0 |
26.5% |
| Baht (Million) | 1,348.90 |
100.0% |
MMPLC contributed 24.7% to the Company's net profit during the first nine months of 2009, compared to only 5.7% during the same period last year, reflecting the highest improvement in net profit contribution among TTA's subsidiaries.
"The Dry Bulk Shipping Group recorded a consolidated net profit of Baht 321.88 million this quarter, excluding exchange losses, a 431.25% increase from the net loss of Baht 97.17 million for the previous quarter. Our total fleet cargo volume for the first nine months of 2009 was 9.206 million revenue tons, a 53.54% decrease from the equivalent period last year. The decrease was in line with the falling demand, so we continued to reduce our capacity in terms of DWT.
"The Baltic Dry Index ("BDI") had slightly rebounded over the last six months of 2009, 3,025 in October 2008 and 3,757 in June 2009 (a 24.2% percent increase). However, we do not expect rates to continue with the current uptrend, because China is unlikely to continue with its heavy imports of iron ore and coal. We are still concerned about the shipping market over the course of 2009 and 2010 due to the structural overcapacity and the sustained weak global economic conditions.
"Though the vessel values may be lagging for a while, it is still difficult to arrive at a reasonable good value. However, we continue to actively search for any potential second hand vessels that will provide investment returns that at least meet the Company's hurdle rate", M.L. Chandchutha commented.
"The Shipping Services Group made a net profit contribution (after deducting minority interests) of Baht 31.47 million, excluding exchange gains, to TTA's financial results. Thoresen Shipping FZE made the highest net contributions, followed by ISS Thoresen Agencies Ltd.
"MMPLC recorded service income for the 2009 Third Quarter of Baht 1,451.26 million, a 54.23% increase from the previous quarter with a net profit contribution of Baht 205.75 million, excluding exchange losses, an increase of 586.88% from the previous quarter. We have seen utilisation levels increase vis-a-vis the first two quarters and expect this renewed utilisation to continue for the foreseeable future. Furthermore, we were able to increase our subsea service coverage geographically and have successfully entered the subsea market in the Middle East. To support this business expansion, our two newbuild DP2 DSVs and one newbuild DP2 ROV are presently under construction and due for delivery by end of the 2009 calendar year", M.L. Chandchutha added.
"The drilling segment generated 41.57% of MMPLC's total revenues this quarter. The overall offshore tender rig market activity level during this quarter remains the same as last quarter. Although we had previously observed some slight downward pressure on day rates across the fleet due to additional rig availability, oil price volatility and delivery of new builds, we believe these reductions have reached the bottomed out and would expect to see new contracts awarded equivalent at today's market rate and future contracts will see an increased rate. As we still experience a high utilisation rate across the global tender rig fleet, we fully expect to see the tendering requests activity increase significantly as oil and gas companies seek to secure rigs for their future programmes.
"Amidst the competitive economic environment, TTA remains profitable and generates positive operating cash flows. We have seen stabilisation and even some improvements in our core businesses," M.L. Chandchutha concluded.
TTA is a leader in the dry bulk shipping industry, providing liner and charter services, and is a major player in Southeast Asian offshore services and drilling services and subsea engineering. TTA is amongst the top 50 companies listed on the Stock Exchange of Thailand with high liquidity.