Pacific Basin Shipping reduces half-year losses 32pc
World's largest carrier of minor bulk cargo reaps benefits of strict cost-cutting efforts
Pacific Basin Shipping cut its half-year underlying losses by 32 per cent to US$14.6 million from a year ago, thanks to stringent cost-cutting efforts that helped it mitigate an anaemic dry-commodities shipping market.
Pacific Basin, the world's largest carrier of minor bulk cargo such as cement, bauxite and sugar, eked out US$5.8 million in net profit in the first half.
The firm said it remained cautious about the dry bulk shipping market outlook, which is experiencing a seasonal recovery from a historical low. The Baltic Dry Index, which tracks freight costs of moving dry commodities, sank to an all-time low in February since the reading began in 1986.
"Negative sentiment has driven increased scrapping [of old ships], new-building cancellations or postponements and very little new orders, but it will take more time for oversupply to be fully absorbed. Bottoming out commodity prices and restocking are positive for trade. The inflection point will likely be triggered by unexpected demand-side events," said chief executive Mats Berglund.
A weak market, Berglund said, would also present opportunities for acquisition. "There haven't been many [mergers and acquisitions] in this market as everybody is busy with managing their own balance sheets. But that may change. We will watch the space and carefully consider should any interesting opportunities arise. We like to be deep and thorough in what we do, and a deal, if any, will make sure we can stay and build on our edge," he said.
Pacific Basin's fleet, which is the world's largest in the handymax and handysize classes with a capacity between 25,000 and 65,000 deadweight tonnes, outperformed the market index by 60 per cent and 49 per cent respectively, earning a daily average of US$7,940 and US$9,350.
The company has embarked on a back-to-basic strategy since Berglund took over in 2012. Since then the company divested several other businesses to be solely focused on the specialised handy, minor bulk sector.
