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Pacific Basin Shipping announces 2018 result

Logistic News - Published on Tue, 05 Mar 2019

Image Source: Pacific Basin
Pacific Basin Shipping Limited, one of the world’s leading dry bulk shipping companies, announced the results of the Company and its subsidiaries for the year ended 31 December 2018. Mr Mats Berglund, CEO of Pacific Basin, said “The freight market strengthened again in 2018 which, combined with our high laden utilisation, continued TCE outperformance and competitive cost structure, enabled us to record much improved earnings. We booked an EBITDA of US$215.8 million and net profit of US$72.3 million and, in line with our dividend policy, the Board is recommending a final dividend per share of HK3.7 cents, giving full-year dividends of HK6.2 cents. We acquired seven modern vessels in 2018 including four that we purchased in a 50% equity-funded transaction, while selling one older vessel. We also closed competitively-priced revolving credit and bilateral term loan facilities amounting to US$365 million. These initiatives have increased our owned fleet to 111 ships on the water, helped to enhance our operating cash flow, EBITDA and balance sheet strength, further reduced our already competitive P&L breakeven levels, and positioned us well for the future.

2019 has started weaker than the last two years with a more pronounced Chinese New Year dip, compounded by the US-China trade conflict, Chinese coal import restrictions and iron ore infrastructure disruptions in Brazil that undermined sentiment further. However, the seasonal recovery is now underway.

While fundamentals for our minor bulk segment remain encouraging, we expect to see increased volatility in 2019, influenced by uncertainty about the trade war and slower economic growth, but also by compliance preparations for the 2020 sulphur cap leading to tighter supply. As we have shown before, Pacific Basin has what it takes to navigate such volatility and changes adeptly.”

Performance Overview
Both our Handysize and Supramax contributions increased significantly year on year, enabling our business to generate a much improved underlying profit of US$72.0 million (2017: US$2.2 million). This improvement is due to better markets, continued TCE outperformance and strong cost control leading to increasing profits from our larger owned fleet.

Our average Handysize and Supramax TCE earnings of US$10,060 and US$12,190 per day net were up 21% and 27% respectively year on year, and outperformed the BHSI and BSI spot market indices by 22% and 12% respectively.

Our ship operating expenses of US$3,850 per day and general and administrative overheads of US$740 per day are also very competitive compared to many of our peers, contributing to a competitive overall cost structure and vessel breakeven level on our owned fleet.

Our TCE premium and competitive costs are driven by our ability to draw on our experienced commercial and technical teams, global office network, strong cargo support and large fleet of high-quality interchangeable ships in ways that optimise ship and cargo combinations for maximum utilisation and by generating scale benefits and other efficiencies from good systems and strict cost control. We operated an average of 139 Handysize and 83 Supramax ships in 2018 resulting in 6% and 13% reductions in our Handysize and Supramax revenue days. This reflects an increase in our owned fleet, offset primarily by fewer short- term chartered-in Supramax ships, mainly due to lower Chinese steel export volumes. We have covered 44% and 63% of our 39,870 Handysize and 19,120 Supramax revenue days currently contracted for 2019 at US$9,370 and US$10,570 per day net respectively.

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Posted By : Sanju Moirangthem on Tue, 05 Mar 2019
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