Thoresen Thai Agencies Public Company Limited ("TTA") reports a strong rebound performance and profits for its 2010 Second Quarter, with positive momentum through the end of the year.
Overall Performance
TTA delivered consolidated net profits of Baht 451.40 million and earnings per share of Baht 0.64 for the three-month period from 1 January 2010 to 31 March 2010 ("2Q FY2010"). This compares with net profits and earnings per share of Baht 99.16 million and Baht 0.14, respectively for the three-month period from 1 January 2009 to 31 March 2009 ("2Q FY2009").
Total operating revenues of 2Q FY2010 were Baht 4,561.99 million and total operating expenses were Baht 4,022.24 million, resulting in operating profits of Baht 539.75 million. This represented a 115.31% year-on-year increase from operating profits of Baht 250.68 million in 2Q FY 2009, and a 554.80% increase from the three-month period from 1 October 2009 to 31 December 2009 ("1Q FY2010").
"We continue to pursue an investment strategy that focuses on three key business groups - Transport, Energy, and Infrastructure. During the past quarter, our dry bulk shipping business delivered a significant majority of revenues and net profits. Our investments in the Energy and Infrastructure Groups underperformed, but show positive signs for the remainder of this year. We continue to believe that over a longer period of time, our business portfolio will continue to strengthen under this strategy," said TTA's President & CEO M.L. Chandchutha Chandratat.
Segment Analysis
The Transport Group's primary business continues to be dry bulk shipping, which recorded a consolidated net profit (excluding exchange loss) of Baht 561.51 million in 2Q FY2010, a substantial improvement from net losses of Baht 97.17 million and Baht 41.39 million in 2Q FY2009 and 1Q FY2010, respectively.
M.L. Chandchutha said "In this quarter, our average time charter equivalent ("TCE") rates increased 43.15% from 1Q FY2010 to USD 13,180 per vessel day. Our improved performance came from stronger freight market conditions, the positive impact of closing our liner services, which has allowed us to trade our vessels in higher paying regions, including the Atlantic, and tight vessel owner expense controls."
During 2Q FY 2010, we sold three vessels and received total cash proceeds of Baht 284.82 million. The combined accounting gains from the sales of these three vessels were Baht 91.06 million, or Baht 87.06 million net of taxes.
The Infrastructure Group saw Baconco contributing net profits of Baht 31.83 million on sales of Baht 434.99 million in 2Q FY2010. During 2Q FY 2010, Baconco sold 30,710 metric tonnes of fertiliser and booked about 50.0% of its total warehouse capacity for logistics.
Unique Mining Services Public Company Limited ("UMS") recorded consolidated net profits (excluding unrealised foreign exchange losses and capitalised interest expenses) of Baht 4.15 million for 2Q FY2010 and contributed Baht 3.72 million of net profits to TTA's consolidated results. Including the foreign exchange loss, UMS reported a loss of Baht 9.59 million, as sales to large-sized clients remain weak and gross margins were pressured by the high cost freight contracts. UMS sold approximately half a million tonnes in the first half of FY 2010. "Demand continues to rise for coal among industrial users in Thailand, which should result in a better second half of the year," said M.L. Chandchutha.
The sole contributor to the Energy Group is Mermaid Maritime Public Company Limited ("MMPLC"), which recorded a consolidated net loss of Baht 171.01 million and contributed a net loss of Baht 97.72 million to TTA in 2Q FY 2010. The loss was the result of low utilisation in both subsea engineering (28.3%) and drilling (50%). The low utilisation rate of subsea engineering in 2Q FY 2010 is normal due to the monsoon conditions, while only MTR-2 was working as compared with two rigs working a year ago.
The holding company, which includes Soleado Holdings Pte. Ltd. and Athene Holdings Ltd., provides strategic direction and support in terms of finance, accounting, human resources, IT, administration, and other services. This quarter, the holding company had a positive contribution of Baht 5.80 million to TTA, compared to a loss of Baht 224.46 million during the last quarter. The positive results substantially came from a gain on currency swap contracts.
Outlook
TTA remains optimistic about our business groups for the longer term.
On the demand front, we believe China's import policy remains the key driver for the global dry bulk market. As for the rest of the world, demand is also growing steadily. The grain market in the South Atlantic showed higher activity.
In general, coal prices follow the trend of the Newcastle Export Index ("NEX"). Given the rising NEX, we expect UMS' average sales price to rise over the next few months accordingly along with demand.
A substantial amount of tendering has been done over the past few months for offshore oil and gas projects, and our orderbook through the end of this year continues to rise. In order to expedite our entry into the Middle East and Persian Gulf region, Subtech Ltd. was acquired. If such opportunities present, we will consider further investments to extend our footprint in the subsea engineering services beyond Southeast Asia.
"When we planned our budgets for this year, we forecast stronger results in the second half of FY 2010 than the first half of FY 2010. We expect dry bulk shipping to remain profitable and MMPLC and UMS to recover during the remaining quarters of FY 2010 and make positive contributions to TTA's performance. We continue to search for interesting investment opportunities across the Asia-Pacific region and hope to invest in a few more transactions before the end of the year," assured President & CEO Chandchutha.
About TTA
Thoresen Thai Agencies Public Company Limited ("TTA") is a strategic investment holding company listed on the Stock Exchange of Thailand. Its investment strategy is to grow through a balanced and diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally. Previously, TTA has only invested and operated in the dry bulk shipping and related shipping services business. Then the company has also expanded its investment into other business areas, such as offshore services through Mermaid Maritime Public Company Limited, fertilisers and logistics through Baconco Co., Ltd., coal-related businesses through Merton Group (Cyprus) Limited and Unique Mining Services Public Company Limited, and petroleum tankers through Petrolift, Inc.