Pacific Basin to buy more vessels

PUBLISHED : Tuesday, 06 March, 2007, 12:00am
UPDATED : Tuesday, 06 March, 2007, 12:00am

Pacific Basin Shipping, the world's largest handysize vessel operator, says it will acquire more dry bulk ships to cope with growing demand for commodities, despite seeing a 25 per cent drop in net profit last year as its freight rates fell and fuel prices soared, more than eroding gains in sales.

The shipper yesterday posted net profit of US$110.3 million for the year to December, compared with US$147.1 million in 2005, even as its revenue jumped 43 per cent to US$620 million. The results were in line with market expectations, according to Bloomberg.

The demand for handysize vessels - with a capacity of 22,000 to 33,000 deadweight tonnes of dry cargo, such as coal and timber - was healthy thanks to the strong appetite for commodities, said Richard Hext, deputy chairman of Pacific Basin.

The benchmark Baltic Handysize Spot Index at the end of last month was US$20,447 per day, up from US$18,000 in January.

To fill the projected growing demand, Pacific Basin will invest US$250 million to acquire 12 handysize vessels this year.

At the end of last month, its core fleet consisted of 70 handysize ships and seven larger handymax ships, which can hold up to 60,000 deadweight tonnes of dry bulk cargo.

Tanker fees have been recovering since they bottomed out in the first-half of last year and dragged down the company's overall earnings.

For the first six months of the year, its handysize yield was US$14,400 per day, which rose to US$16,290 in the second half.

Overall for the year - including contractual and spot prices - it fell 10 per cent from 2005 to US$15,420, said Andrew Broomhead, chief financial officer of the company.

Pacific Basin offered a final dividend of 22.5 HK cents per share in light of a 65 HK cents gain per unit.