Titan sinks into loss on lower rates
Oil and chemicals trading and logistics firm Titan Petrochemicals Group plunged into a net loss last year on the back of lower tanker rates, higher fuel costs and lower trading margin.
The company, 13.25 per cent owed by United States-based private equity firm Warburg Pincus, yesterday posted a HK$29.1 million net loss, compared with a profit of HK$100.33 million in 2006.
That was despite a HK$262 million gain from crude tankers disposals. Gross profit slid 31.14 per cent to HK$456.60 million.
Titan's transportation operation was the worst performing, with a 71.2 per cent plunge in operating profit to HK$128.25 million excluding the disposal gain, due to a 20 per cent rise in fuel costs and lower freight rates amid ample tanker supply.
The company's strategy to gradually sell down its tanker fleet also cut transport profit. After selling two vessels in the first quarter, Titan owns seven vessels, which it plans to either sell or convert into oil production or refuelling vessels by 2010 when single-haul vessels must be phased out.
Operating profit from oil products supply and bunkering refuelling tumbled 27.8 per cent to HK$54.2 million.
Its margin was squeezed to 0.34 per cent, from 0.76 per cent in 2006, after a spike in oil price damped buying interest in the fourth quarter.
Titan is pinning its hopes of profit growth on its onshore oil storage facilities, which made an operating loss of HK$3.19 million last year.
Its facilities in Nansha of Guangzhou were only 43 per cent utilised last year, with a decline in the second half as state price control rendered fuel imports unprofitable.
After Titan switched its focus to non-mainland customers, such as companies that provide refuelling services to vessels in the open sea off the Pearl River Delta, the Nansha storage's occupancy has risen to 52 per cent late last month.
President Patrick Wong said Titan aimed to raise occupancy to the breakeven level of 70 per cent by the end of the year.
Contribution from a shipyard purchased last year from Titan's majority shareholder, chairman Tsoi Tin-chun, would also help return the company to the black this year, he added.
From a profit of HK$100.33 million in 2006, Titan posted a net loss of, in HK$: $29.1m