Skaugen Group posts third quarter results
The I.M. Skaugen Group (IMSK) announced satisfactory third quarter results. Net pre-tax profit at the end of 3Q08 is USD21.5 million vs USD21 million in end 3Q07. The result on EBITDA basis year to date 3Q08 is USD46.7 million compared to USD34.8 million year to date 3Q07 The pre-tax profit was USD4.5 million for the 3Q08 compared to USD12.8 million for the 3Q07. The result of the 3Q08 on an EBITDA basis was USD14.5 million compared to USD18.6 million for the 3Q07.
I.M. Skaugen (IMS) is engaged in three business units; Norgas comprises the group's gas transportation activities, SMC is responsible for the new ship building activities in China. SPT is involved in marine transfer of crude oil and LNG.
Norgas, our petrochemical gas carrier business
Norgas continued to produce another quarter of satisfactory results. The main focus area of Norgas are the exports out of Middle East. The Middle East countries with exports continue to drive the increased demand "ton miles" and the resulting increased demand for gas carriers. Norgas is well positioned in this market with our long term customer relations, state of the art fleet and a good portfolio of suitable new built ships.
Signs of a slow down in some parts of the global economy, has not affected the demand for Middle East petchem mainly due to the substantial cost advantage (feed stock advantage) the region has over other producers. The economic growth in the key emerging markets (such as the "BRIC"-countries as well as the Middle East region) are expected to remain relatively strong. A potential slower growth in the Western world may affect some of the ethylene demands, but we will see growth in demand for these products. The possible slower or no growth in the West may thus affect the growth of demand for volumes, but this will probably be balanced out by the "ton mile" effects due to the changing trade patterns.
Skaugen Marine Construction (SMC), our China-based shipbuilding organisation.
During the quarter SMC completed and delivered the third 3,200 cbm LPG carrier to its new owner. This represents the successful completion of the "Summergas" class vessels built to initiate and test our unique concept of managed subcontracting.
The SMC shipbuilding activities in China are susceptible to price changes of components, labor as well as fluctuations in exchange rates. Our situation mirrors many shipyards in this area; they all suffer from the same issues that we are struggling with on cost. For our case the main problems stems from the engineering and the design process. The delays have caused delays in purchases and made us suffer from the rapid cost increases in this industry.
SPT, our Marine Transfer business
The third quarter represented continued positive development consistent with SPT's concept. The company is now able to provide a broad range of services in different geographical areas - now also including operational platforms in Rotterdam and Cyprus.
The Aframax fleet provides the company with operational flexibility and the possibility to be active in the market which provides the best risk adjusted return at the moment.
The effect of the global financial crisis on our finances
Buy back of parts of IMSK03 and issue of IMSK05
I.M. Skaugen SE has in 3Q08 bought back a total amount USD55 million in IMSK03 (maturity June 2009), and completed a new Bond Issue IMSK05 (maturity Sept 2011). The total amount in the new bond issue is NOK200 million. The new bond is a 3 year, unsecured fixed rate note with a coupon rate of 10.5 percent in NOK. The repayment obligation has been swapped to USD. As a result of this the total amount of debt due in 2009 for the IMS group is now only USD13 million and we have sufficient liquidity to repay this amount.
All our new buildings (9 in total) have secured proper long term financing upon completion and thus we do not envision any significant financing risk for the company upon completion.
Profit and Loss account have been charged with USD2.2 million in financing and refinancing costs.
We have not experienced any negative developments in our counterparty risk for any financial obligations or receivables and thus have not experienced any effect of the prevailing financial crisis. We expect at the time of writing that our business will continue to operate in a normal way and do not expect a serious set back due to the crisis as we have seen it so far.
I.M. Skaugen (IMS) is engaged in three business units; Norgas comprises the group's gas transportation activities, SMC is responsible for the new ship building activities in China. SPT is involved in marine transfer of crude oil and LNG.
Norgas, our petrochemical gas carrier business
Norgas continued to produce another quarter of satisfactory results. The main focus area of Norgas are the exports out of Middle East. The Middle East countries with exports continue to drive the increased demand "ton miles" and the resulting increased demand for gas carriers. Norgas is well positioned in this market with our long term customer relations, state of the art fleet and a good portfolio of suitable new built ships.
Signs of a slow down in some parts of the global economy, has not affected the demand for Middle East petchem mainly due to the substantial cost advantage (feed stock advantage) the region has over other producers. The economic growth in the key emerging markets (such as the "BRIC"-countries as well as the Middle East region) are expected to remain relatively strong. A potential slower growth in the Western world may affect some of the ethylene demands, but we will see growth in demand for these products. The possible slower or no growth in the West may thus affect the growth of demand for volumes, but this will probably be balanced out by the "ton mile" effects due to the changing trade patterns.
Skaugen Marine Construction (SMC), our China-based shipbuilding organisation.
During the quarter SMC completed and delivered the third 3,200 cbm LPG carrier to its new owner. This represents the successful completion of the "Summergas" class vessels built to initiate and test our unique concept of managed subcontracting.
The SMC shipbuilding activities in China are susceptible to price changes of components, labor as well as fluctuations in exchange rates. Our situation mirrors many shipyards in this area; they all suffer from the same issues that we are struggling with on cost. For our case the main problems stems from the engineering and the design process. The delays have caused delays in purchases and made us suffer from the rapid cost increases in this industry.
SPT, our Marine Transfer business
The third quarter represented continued positive development consistent with SPT's concept. The company is now able to provide a broad range of services in different geographical areas - now also including operational platforms in Rotterdam and Cyprus.
The Aframax fleet provides the company with operational flexibility and the possibility to be active in the market which provides the best risk adjusted return at the moment.
The effect of the global financial crisis on our finances
Buy back of parts of IMSK03 and issue of IMSK05
I.M. Skaugen SE has in 3Q08 bought back a total amount USD55 million in IMSK03 (maturity June 2009), and completed a new Bond Issue IMSK05 (maturity Sept 2011). The total amount in the new bond issue is NOK200 million. The new bond is a 3 year, unsecured fixed rate note with a coupon rate of 10.5 percent in NOK. The repayment obligation has been swapped to USD. As a result of this the total amount of debt due in 2009 for the IMS group is now only USD13 million and we have sufficient liquidity to repay this amount.
All our new buildings (9 in total) have secured proper long term financing upon completion and thus we do not envision any significant financing risk for the company upon completion.
Profit and Loss account have been charged with USD2.2 million in financing and refinancing costs.
We have not experienced any negative developments in our counterparty risk for any financial obligations or receivables and thus have not experienced any effect of the prevailing financial crisis. We expect at the time of writing that our business will continue to operate in a normal way and do not expect a serious set back due to the crisis as we have seen it so far.