Thoresen Thai Agencies Plc (TTA), the country's largest shipping company, saw a slight fall in profits in the first three months of this year due to oversupply and lower freight rates. TTA said net profit in its fiscal second quarter to March 31 was 2.103 billion baht, down 18.52% from 2.58 billion baht in the previous quarter. Sales revenue declined 0.7% from the first quarter to 7.975 billion baht. The declines were due mainly to the lower average time charter equivalent (TC) rates for TTA's vessels, resulting from a surplus in service providers and lower demand from clients, said M.L. Chandchutha Chandratat, the TTA managing director.
The average time charter equivalent or TC rate was down by 3.16% to US$25,083 per vessel per day early this year compared to the end of last year.
Despite the fact that the market seemed to be tougher for shippers, he insisted that the decline was not significant since it compared to a record in the previous quarter.
''Our net profit was still strong and we expect it to continue in the following six months,'' he said.
He said that as long as consumption remained high, the overall shipping industry would grow. ''In the short run, we expect strong demand in fleet cargo as the slowdown in the US economy is offset by demand from China, India and the Middle East.''
He also forecast that since the TC rate had already declined, it should remain stable throughout the rest of the year.
As well, strong demand for dry bulk shipping and offshore services has helped offset a weaker US dollar and lower-then-expected contributions from the drilling business. TTA was better able to cope with higher vessel operating expenses and fleet expansion. While global demand is not expected to move much, TTA expects to face higher expenses from crude oil and maintenance.
For the next year, M.L. Chandchutha expects to see the TC rate gradually decline in line with greater competition.
''Many vessels have been ordered and are expected to be ready for operation next year. This is expected to create an oversupply and it will put more pressure on the TC rate,'' he added.
But M.L. Chandchutha is still hopeful that delays in vessel delivery and more demand for copper, iron and cement should cushion supply pressures.
While TTA expects its offshore services to perform better, it forecast that its fiscal fourth-quarter revenue would not be as high as in other quarters as it would be the low season.
For TTA's three business groups, dry bulk shipping contributed 94.52% of total profit at 1.965 billion baht, shipping services contributed 3.22% while offshore services contributed 86 million baht.
TTA shares closed yesterday on the Stock Exchange of Thailand at 55 baht, up 50 satang, in trade worth 1.69 billion baht.
The average time charter equivalent or TC rate was down by 3.16% to US$25,083 per vessel per day early this year compared to the end of last year.
Despite the fact that the market seemed to be tougher for shippers, he insisted that the decline was not significant since it compared to a record in the previous quarter.
''Our net profit was still strong and we expect it to continue in the following six months,'' he said.
He said that as long as consumption remained high, the overall shipping industry would grow. ''In the short run, we expect strong demand in fleet cargo as the slowdown in the US economy is offset by demand from China, India and the Middle East.''
He also forecast that since the TC rate had already declined, it should remain stable throughout the rest of the year.
As well, strong demand for dry bulk shipping and offshore services has helped offset a weaker US dollar and lower-then-expected contributions from the drilling business. TTA was better able to cope with higher vessel operating expenses and fleet expansion. While global demand is not expected to move much, TTA expects to face higher expenses from crude oil and maintenance.
For the next year, M.L. Chandchutha expects to see the TC rate gradually decline in line with greater competition.
''Many vessels have been ordered and are expected to be ready for operation next year. This is expected to create an oversupply and it will put more pressure on the TC rate,'' he added.
But M.L. Chandchutha is still hopeful that delays in vessel delivery and more demand for copper, iron and cement should cushion supply pressures.
While TTA expects its offshore services to perform better, it forecast that its fiscal fourth-quarter revenue would not be as high as in other quarters as it would be the low season.
For TTA's three business groups, dry bulk shipping contributed 94.52% of total profit at 1.965 billion baht, shipping services contributed 3.22% while offshore services contributed 86 million baht.
TTA shares closed yesterday on the Stock Exchange of Thailand at 55 baht, up 50 satang, in trade worth 1.69 billion baht.