IMSK - Half yearly financial result 2009>
IMSK - Half yearly financial result 2009
(Thomson Reuters ONE) - The I.M. Skaugen Group (IMSK) today announces another profitablequarter in these challenging macro economic times.The pre-tax profit was USD1.5 million for the 1H09 compared toUSD16.8 million for the 1H08. The result of the 1H09 on an EBITDAbasis was USD14.2 million compared to USD32.2 million for the 1H08.The pre-tax profit was USD1.2 million for the 2Q09 compared to USD8,6 million for the 2Q08. The result of the 2Q09 on an EBITDA basiswas USD6.9 million compared to USD 17,1 million for the 2Q08 and USD7,4 million in 1Q09.We are pleased about the overall financial performance of the companyunder the current economic conditions in the world. The ongoing"Great Recession" could indicate that companies like ourselves couldsuffer a heavier decline in profitability than we have done. Despitethe severe global recessionary environment we are currentlyexperiencing, especially in the "OECD countries"; IM Skaugen iscapitalizing on a few key factors that are risk mitigating. Chiefamongst these are the relative high contract coverage we enjoy in ourcore segments as well as our focus on activities for petchem gastransportation for clients based in the "low cost" Middle East regionand for markets in Asia. Adding to this the benefit we have from themuch more resilient business conditions in China. Finally we do enjoya position of being "cost leaders" in many of our business units thatenables us to achieve a margin where others are operating at lossmaking levels.During 2Q09 we have entered into further contracts at acceptablemargins, which underline the long term industrial commitment we havein our specialized market niches. The contract coverage for the Groupcurrently stands at 77 % as of end of 2Q09. Norgas (our gas carrieractivity) has further improved its market position for carryingcargoes out of the Middle East, and SPT (our marine transferactivity) renewed three contracts for full service lightering atfavorable rates during 2Q09.Throughout the second quarter we have seen some improvements invisibility regarding the financial "macro picture". The worldwiderecession has reduced the global output for many goods and servicesand the surplus capacity from this reduction and the planned capacityincreases is creating significant profitability challenges forbusinesses world-wide. This will be ongoing for some time in manyrelevant industries. We see that "GDP growth" is probably nowreturning in many geographical regions perhaps with the exception ofmany countries in Europe. The massive governmental capital injectionshave brought the banking systems into safer territory and theunexpectedly resilient growth in the "extended BRIC countries" arealso contributing factors.Our two main strategic geographical focus areas - China and MiddleEast have performed quite well. China has clearly passed the worst inthe last two quarters, and growth for the year is by many estimatedto end at a level close to 8% and probably even higher in 2010. TheMiddle East economies are at the same time fuelled by the higher oilprices, and will remain a high growth area going forward. Combinedthese factors should fuel a rise in consumption, investments and riskappetite.The "decoupling" of our current business, with our focus on MiddleEast region and China vrs the more traditional "OECD relatedbusiness", is demonstrated by the below graph and illustrating thepast vrs current. In the past the Norgas earnings have historicallybeen quite closely correlated to global GDP growth (and at timeswhere the OECD economies counted much more towards the world GDP thantoday). During this current global downturn we have seen that thesetwo indicators are decoupling. The emergence of most new economiesthat are in a growth modus vrs the traditional economies of the OECDregion as well as our strategy of building a higher contract coveragewith key costumers in the higher growth regions are probably thereasons for this decoupling.We have also in the 1H09 been able to reduce our cost of operationsalmost across the board. This enabled us to break a trend where we,as most others in the maritime related industries, experiencedrapidly increasing cost of operations. The increases were mostly as aresult of the high utilization of capacity available for resourcesneeded and as a result of the high growth in the marine servicesvalue chain of the world since 2003. This trend has now been brokenand we have now turned the upward trend into reductions in most areasof our operations. We have an aim to remain "cost leaders" in ourareas of business and we have several ongoing programs to ensure weremain in this position.Issues related to capital and our debt financingThe improved macro economic outlook in 2Q has driven credit spreadsdown, and the spreads in Norwegian high yield bond market hascontinued to tighten sharply over the last months. The market isstill at extreme elevated levels, but is considerable down from theall-time-high-level seen in March this year. The banking systemsavailability of finance for shipping companies in general is quitedifficult and it is an advantage to not have major refinancing needsat the moment. We as a company have no immediate needs forrefinancing or need for capital for our CAPEX. Our CAPEX program isfully funded and this mitigates the operational risks many suffer dueto insufficient capital secured for their CAPEX programs.Our Bond portfolio of outstanding loans - updateAverage interest cost (incl. of margin) for all of our bond financedfunds and debt adjusted for ownership in JV`s now stand at 4,33 %given current USD short term interest rates.During 2Q we repaid the remaining IMSK 03 bond at maturity - totalamount issued was USD 75 million. The repurchase has over time beenfinanced through operational cash flow and proceeds from issuance ofa new bond IMSK 06/ 07 (as described in 1Q09 report).Despite an illiquid bond market, we have proven our strength via theissuance of three new bonds the last 9 months at terms/rates, whichthe company find acceptable - one of very few companies which havebeen able to issue new bonds in the Norwegian bond market. We arefurther building on our proven track records towards our debtinvestors.We have USD36 million of bonds falling due for repayment within next12 months. The bond with the longest duration matures in June 2012.We have tapped the bond markets mainly to provide constructionfinance or working capital for our newbuilding programs at SMC.Maturity in the outstanding bond portfolio will mostly be offset byfunds to be received from sale and lease back arrangements of shipsunder construction by SMC. The counter party in these sale lease backstructures are Teekay LNG Partners for two more "Wintergas" vesselsand two "Multigas" vessels - net accumulated until September 2011(see overview):Credit lines/ other financial issuesIn addition to the credit lines reported in 1Q report, we havesecured further credit facilities in China with major Chinese banksfor an initial total of USD32 million, based on our unique positionand structure in China. These loan facilities will add to theflexibility needed going forward to adjust our activity to theopportunities as we see them. For us it is a major achievement to tapthe Chinese credit markets to fund our China based operations goingforward. We envision to also be able to source capital for our nonChinese operations in China in the future.During 2Q we also formalized and concluded on a new credit facility,of up to USD35 million, with our key Nordic based commercial lendingbank, which is an important cornerstone in our financial structure.Due to this we have secured an even better financial platform for IMSgroup going forward - a fully financed new building program withsolid counterparts (construction finance, sale-leaseback solutionsand take-out financing) and backup facilities if something unexpectedshould happen. In our new facilities, we have also been able toreduce minimum value risk exposure re fluctuating vessel values goingforward.Buy back of sharesIn 1Q we initiated a process to buy back shares as we found the shareprice to be attractive, and in 2Q we bought back a limited number ofshares. Our holdings after this transaction are 45,600 shares.Share price development - relative to indexes and peers (rebased 12months performance)The IMSK share has performed reasonably well vs. its peers and stockmarket indexes over the last 12 months. After lagging behind duringthe initial phase of the stock market recovery in March the shareprice has headed higher during the last month of the quarter.Oslo, 14th July 2009Board of Directors and CEOI.M. Skaugen SEBoard of DirectorsIf you have any questions, please contact:Bente Flø, Chief Financial Officer, on telephone +47 23 12 03 30/+4791 64 56 08 or by e-mail: bente.flo(at)skaugen.com. This press releaseis also available on the Internet at our website:http://www.skaugen.com.Listed on the Oslo Stock Exchange under the ticker code IMSK, I.M.Skaugen SE (IMS) - is a marine transportation service company engagedin the hassle-free transportation of petrochemical gases LPG and LNG,marine transfer of crude oil and LNG, and the design and constructionof smaller and specialised high quality vessels.We are a fully integrated shipping company that designs, builds,owns, mans and manages our own ships. IMS customers are majorinternational companies in the oil and petrochemical industry, whomwe serve worldwide from our presence in Bahrain, Freeport and Houston(USA), Oslo and Stavanger (Norway), Singapore, Sunderland (UK) andNanjing, Shanghai, Taizhou, Zhangjiagang and Wuhan (China). We alsooperate recruitment and training programmes in St. Petersburg(Russia) and Wuhan (China) for the crewing of vessels.IMS employs approximately 1,700 people and currently operates about35 vessels worldwide. The fleet comprises petrochemical gas and LPGcarriers, Aframax tankers and lightering support vessels, barges andtugs.We have a comprehensive newbuilding programme in China, of whichthree 3,200cbm LPG vessels are delivered and sold; threepurpose-designed combination carriers with LPG/Ethylene/VCM andOrganic chemicals carrying capability; and up to ten advanced10,000-12,000cbm LNG/ LPG/Ethylene gas carriers, with delivery from2009 and onwards. IMS has invested and built up internal resourcesand infrastructure in China to ensure innovative and flexible vesselsat lower cost. During 2008 we also completed our latest fleet renewalprogramme for SPT, with the delivery of six new purpose-designed and-built Aframax tankers on a long-term bareboat charter.http://hugin.info/179/R/1328789/313379.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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Datum: 14.07.2009 - 16:01 Uhr
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