IMSK - 3rd Quarter 2009
(Thomson Reuters ONE) - The I.M. Skaugen Group (IMSK) today announces a small negative resultfor this quarter in these challenging macroeconomic times.The pre-tax result was negative USD2.8 million for the 3Q09 comparedto a positive USD4.4 million for the 3Q08. The result of the 3Q09 onan EBITDA basis was USD4.6 million compared to USD14.5 million forthe 3Q08. The pre-tax profit was negative USD1.3 million YTD 3Q09compared to positive USD 21.2 million for the YTD 3Q08. The result ofthe YTD 3Q09 on an EBITDA basis was USD18.9 million compared toUSD46.7 million for the YTD 3Q08.Group financialsThe book equity, excluding minority interest, totaled USD101 millionor USD3.72/NOK22.00 per share. The book equity represents about 29.3per cent of the total assets. The net debt at the end of 3Q09 wasUSD55.8 million and the net interest-bearing debt totaled USD130.5million. The ratio between current assets and current liabilities is343 per cent.Total liquidity as of the end of 3Q09 was USD74 million, which isregarded as sufficient for the company's ongoing business activities.The working capital requirements continue to be high in historicalterms due to the current newbuilding commitments. Interest coverageratio was 2.1 for 3Q09, as against 3.2 for 2008.Steady as she goes - Steady performance in a challenging environmentWe are not satisfied about the overall financial performance showinga negative result for the quarter, but acknowledge a few positives aswell. Despite the decline in profits compared to first half,underlying earnings fundamentals remain fairly steady.Under the challenging economic conditions around the world thecompany continues capitalizing on some key risk mitigation factors -a) the relative high contract coverage that we enjoy in our coresegments, b) our focus on activities for petchem gas transportationfor clients based in the "low cost" Middle East region and formarkets in Asia, c) the benefit we have from the much more resilientbusiness conditions in China and d) lastly we do enjoy a position ofbeing "cost leaders" in many of our business units that enables us toachieve a margin where others are operating at loss making level.These risk mitigating initiatives has led to a "decoupling" of ourcurrent gas business, with our focus on Middle East region and Chinaversus the more traditional "OECD related business", is visualized bythe below graph.. Norgas` earnings have historically been quiteclosely correlated to global GDP growth (and at times where the OECDeconomies counted much more towards the world GDP than today). Duringthis current global downturn we have seen that these two indicatorsare decoupling. The emergence of most new economies that are in agrowth modus versus the traditional economies of the OECD region, aswell as our strategy of building a higher contract coverage with keycostumers in the higher growth regions, are probably the reasons forthis decoupling.In the third quarter Norgas has further improved its contractposition. At the end of the quarter the overall 12 month rollingcontract coverage stands between 60-65 percent, which underline theindustrial and long term commitment we have in our niche segments, aposition we are continuously working on developing further.The end of the "Great Recession"Even though business conditions remain challenging, there is broadbased evidence of a recovery in the global economy and mostforecasters and policy makers have revised their economic projectionsduring the past few months. According to IMF the recession is ending,but a subdued recovery lies ahead. While Asian economies andespecially China has had an astonishingly rebound, the advancedeconomies are only stabilizing or showing a modest upturn.In this environment we continue to focus on our two main strategicgeographical focus areas - China and Middle East as we see these twoareas as major sources of growth in the world economy going forward.The Middle East region are fuelled by higher oil prices and IMFestimate a growth of 4,2% next year, while China is most likelyending the first year with negative global growth in decades at animpressive + 8-9%.Issues related to capital and our debt financingAs the economic outlook has improved, credit spreads has continued tonarrow from elevated levels. The Norwegian high yield bond market hasexperienced some active autumn months, but it has been a selectivemarket, and only a few shipping companies has been able to tap intothe market at acceptable terms. Traditional bank debt capacity forshipping companies is still difficult to obtain, and in that contextwe are very pleased that our newbuildings are fully funded and thatwe do not have any imminent need for refinancing of debt.At the end of Q3 total capex commitments on our newbuilding stand atUSD 56M for vessels financed trough sale and leaseback solutions, andUSD 36M (adjusted for ownership in JV's) for vessels financed viadebt facilities.Project Construction finance Post Delivery financeWintergas 3 x (5 Trough IMS bonds Sale & Leaseback with800/ 9 600cbm) Teekay LNG PartnersMultigas 4 x (10.000 Construction loan Loan facility, 18 yearcbm) facility repayment profile, 80% leverageMultigas 2 x (12.000 Included in Sale & Sale & Leaseback withcbm) Leaseback Teekay LNG PartnersIn August the group completed a new bond issue with maturity in July2011, a total of NOK 500 million (equal to abt. USD 83 million). Thenew issue is a floating rate note with a coupon margin of 6.00% over3 months NIBOR and is unsecured and with other relevant covenantterms similar to our previous bond issues. The bond is listed on theOslo Stock Exchange's ABM and the repayment obligation in NOK isswapped to USD.This new bond is part of the company`s proactive efforts to reduceany potential refinancing risk in the bond loan portfolio for 2009and 2010. The company has an ongoing new building program to satisfyits need for more tonnage. We currently have 8 ships to be deliveredand of those 8 we have 6 Multigas carriers that are LNG capable gascarriers that also carry ethylene and LPG. These ships are all underconstruction with Skaugen Marine Construction (SMC) in China. Ourlonger term goal is to build 10 new Multigas carriers with LNGfeatures and this new facility will be part of this process tofinance our new building program. We are further building on ourproven track records towards our debt investors.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):Proceeds of the transaction have been used to repurchase bondsmaturing in 2010, extending the maturity schedule to 2011. In thequarter we also sold parts of our own share of IMSK04.Our Bond portfolio of outstanding loans - updateAverage interest cost (incl. of margin) for all of our outstandingbonds financed now stand at 5,8 % given current USD interest rates.We have USD3.3 million of bonds falling due for repayment within next12 months. The bond with the longest duration matures in June 2012.The IMSK shareBuy back of sharesIn 1Q09 we initiated a process to buy back shares as we found theshare price to be attractive, and in 3Q09 we bought back a limitednumber of shares. Our holdings after this transaction are 59,600shares.The IMSK share has performed well vs. its peers and stock marketindexes over the last 12 months. After lagging behind during theinitial phase of the stock market recovery in March the share pricehas headed higher and especially during the third quarter.http://hugin.info/179/R/1347867/324219.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 15.10.2009 - 17:40 Uhr
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