respectively. This enables us to generate strong and predictable cash flows while also pursuing market opportunities as they arise.
DIS continued to strengthen its position in the market increasing the number of owned vessels, by exercising three vessel purchase options, in advance and at attractive prices, thereby
capturing the significant equity built?up in these vessels. At the same time, considering that the sale and purchase of vessels is an integral part of our business model, we took advantage of the high prices achieved for second hand vessels, selling the MT High Trust, which realized a profit of about US$22 million. We also increased our overall fleet through 3.3 additional time chartered?in vessels. We have a solid financial condition, low financial debt and strong cash flow generation enabling us to pursue our expansion strategy over the next months to further enhance shareholder value. OPERATING PERFORMANCE Time charter equivalent earnings for the three months ended 31 March 2008 were US$57.3 million, lower than US$68.7 for the three months ended 31 March 2007. The variance is mainly attributable to the decrease in TCE per employment day of 10.4%, to US$20,234 (Q1 2007: US$22 574). Also, in Q1 2008, 35.2 vessels were operated on average compared to 36.0 vessels in Q1 2007. Gross operating profit (EBITDA) for the period ended 31 March 2008 amounted to US$47.0 million (US$24.8 million excluding gain from disposal of vessel), compared to US$33.7 million for the period ended 31 March 2007. As a percentage of time charter equivalent earnings, the gross operating profit margin in Q1 2008 was of 43.3% (excluding gain from disposal) compared to 49.1% in Q1 2007. This variance in margins is essentially attributable to the decrease in TCE earnings driven by the generally expected weaker market conditions, which have been mitigated by the improvement in the operating costs following the increase of the percentage of owned vessels to 47.5% of the fleet in Q1 2008 compared to 36.1% in Q1 2007. Operating profit (EBIT) for the quarter ended 31 March 2008 amounted to US$38.4 million (US$ 16.1 million excluding the gain from disposal of one vessel) compared with US$ 26.3 million in Q1 2007, which was realized at the peak of the product tanker market last cycle. Net profit for the quarter ended 31 March 2008 amounted to US$35.3 million (US$13.1 million
For the full year 2008, we expect an even larger influx of new buildings (almost 11% fleet
expansion; source: Clarkson Research Services), and a slow?down in economic and oil demand growth as result of the difficulties being experienced by financial institutions and high oil prices. Nevertheless, a number of mitigating factors should sustain freight markets, namely (i)
An increase in requests for long?haul voyages, driven by a growing dislocation between refining capacity and demand – the majority of new refining capacity is being added in South East Asia and the Middle East, far away from the key consuming areas of Europe and North America; (ii) Rising demand for IMO classed vessels to cover the strong and growing market for the carriage of vegetable, palm oil and chemical products; (iii) A further tightening of vetting
and screening procedures from oil companies, favouring modern, double?hull vessels, operated by owners with full in?house ship?management and crewing; (iv) A substantial increase in forecasted product refining capacity, of 2.9 million barrels per day (bpd) in 2008 (source: International Energy Agency July 2007 medium?term oil market report). The continued worldwide economic turmoil, combined with high bunker prices, reduced trading activity, and high influx of new buildings has impacted the spot market and market forecast for 2008, presently evaluated to be 7 – 10% below that of 2007 performance for medium range vessels.