Pacific Basin earnings surge 328pc on higher average dry bulk rates
Pacific Basin Shipping delivered yesterday a stronger than expected 328 per cent jump in net profit for last year on higher average dry bulk rates.
The world's largest operator of smaller - so-called handy-size - bulk cargo vessels said it would continue to diversify into the terminal business on the mainland, believing the nation's demand for raw materials and export growth would stay robust.
'There are a number of Chinese projects in our sights,' said chief executive Richard Hext.
Another senior manager said the firm hoped to announce a river or sea port investment in China this year but gave no details.
Last year, Pacific Basin invested in a river port in Nanjing, the highest-altitude port along the Yangtze River. The company also diversified into tugboats and roll-on, roll-off vessels for car transportation due to less competition in that area and huge market potential.
Sitting on US$649.5 million in cash at the end of last year - 10 times its cash position in 2006 - the company said it would fund its US$680 million capital expenditure plan for the next four years on its own. This includes orders for bulk vessels, roll-on, roll-off vessels and tugboats, as well as terminal projects.
The company will stick with its payout ratio of about 50 per cent this year despite its cash surplus.
Net profit rose to US$472.1 million last year from US$110.3 million a year earlier.
Stripping out the one-off gain from a vessel disposal, profit increased 287 per cent year on year to US$334.7 million.
The results beat market expectations by 34 per cent, based on an expected profit of US$351.7 million, the mean estimate by analysts in a Thomson Financial survey.
Earnings per share rose 263 per cent to 30.1 US cents.
The directors recommended a final dividend of 75 HK cents per share compared with 22.5 HK cents in 2006.
Handy-size revenue days, the number of sailing days of the vessels, increased 22 per cent to 20,100 last year while the handy-size daily charter rate rose 50 per cent to US$23,200.
This year, revenue days would increase 16 per cent to 23,310 days, of which 57 per cent would be at US$27,360 per day, up 18 per cent from last year, the company said.
Dry bulk industry conditions are expected to remain firm in the months ahead because of restocking demand for coal and iron ore on the mainland and the upcoming South American grain season, according to Merrill Lynch.
