Thoresen Thai Agencies Public Company Limited ("TTA" or the "Company") achieved good performance for the 2009 First Quarter that ended on 31 December 2008 (the "2009 First Quarter"), posting Baht 897.1 million of net earnings amid continuing global economic turmoil.
M.L. Chandchutha Chandratat, Managing Director of TTA, announced that "Our total operating revenues and net profits for the 2009 First Quarter amounted to Baht 7,271.4 million and Baht 897.1 million, respectively. Included in the 2009 First Quarter results is a gain on the repurchase and cancellation of TTA's convertible bonds of Baht 545.3 million. The Company repurchased US$ 39 million of principal value, or 23.0 percent of the total issue, at a weighted-average price of 61.4 percent per bond.
"Cash and cash equivalents increased by Baht 366.8 million during the 2009 First Quarter. The Company generated cash of Baht 2,032.1 million in operating activities, and used Baht 1,117.8 million and Baht 732.9 million for investing activities and financing activities, respectively.
"The main reason for the drop in net earnings growth was the drop in time charter equivalent ("TC") rates from USD 24,202 per day in the 2008 Fourth Quarter (1 July 2008 - 30 September 2008) to USD 10,326 per day in the 2009 First Quarter. The steel industry, which accounts for almost 50 per cent of the dry bulk trade, introduced global steel production cuts of 20 - 30 percent. China, which has been the driver behind the dry bulk super cycle which started in 2003, has for the first time experienced negative growth in steel production. This has resulted in very low iron ore imports to the country. As new vessels are entering the market at a steady pace with lower demand, this is creating an imbalance. The credit crunch has also made it difficult to open letters of credit, which in turn has had a severe effect on spot trading of many commodities, such as grains, soybeans, sugar, cement, and alumina".
"For the 2009 First Quarter, Mermaid Maritime Public Company Limited (MMPLC) made a net profit contribution to TTA's 2009 First Quarter of Baht 180.0 million, excluding exchange gains, a decrease of 26.1% from the 2008 Fourth Quarter. The Shipping Services Group made a net profit contribution (after deducting minority interests) of Baht 76.3 million, excluding exchange losses, to TTA's financial results. Excluding variable compensation accruals, the net profit contribution (after deducting minority interests) increased 4.0% between the 2008 Fourth Quarter and the 2009 First Quarter." M.L. Chandchutha added.
"We have taken into account the highly cyclical nature of the dry bulk shipping industry in our investment plans. We believe we are now entering a period of low charter rates and vessel prices, which creates different opportunities to produce high returns. Our Company has one of the lowest debt levels in the dry bulk shipping industry. We believe that the present credit crunch will create new market opportunities as there are fewer buyers and lower vessel prices, but also fewer new ships delivered from the shipyards due to financing constraints.", M.L. Chandchutha noted.
Dry bulk shipping experienced a sharp downward trend in the 2009 First Quarter. The Baltic Dry Index (BDI) started the quarter at 3,025, but by the end of the quarter fell to 774, down 74.41%. Similar trends occurred in the various vessel indices. The Baltic Supramax Index tumbled 83.79% from USD 27,179 on 1 October 2008 to USD 4,405 on 24 December 2008. Vessel values have witnessed a significant decline since the end of the 2009 First Quarter.
The assets in the subsea engineering segment had an 59% utilisation rate during the 2009 First Quarter, and generated 65.0% and 54.5% of Mermaid Maritime Public Company Limited's ("Mermaid") revenues and operating profits, excluding exchange gains, respectively. This strong performance was a combination of higher day rates and good utilisation. For the drilling segment, it generated 32.0% and 43.2% of Mermaid's total revenues and operating profits, excluding exchange losses, respectively. Utilisations of MTR-1 and MTR-2 for the quarter were 100%.
"For the first time ever, the net profit contribution from the Offshore Services Group exceeded the Dry Bulk Shipping Group, so Mermaid's positive results provided some cushion against the significant drop in shipping profitability." M.L. Chandchutha said.
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 through Mermaid. TTA is amongst the top 50 companies listed on the Stock Exchange of Thailand with high liquidity.