Precious Shipping Plc (PSL), Thailand's second-largest dry-bulk carrier, reported a 75% year-on-year drop in third-quarter earnings, reflecting a smaller fleet and revenue falling sharply because of baht appreciation.
Net profit was 173.9 million baht in the quarter to Sept 30 compared with 703 million a year earlier, but rose 10% from three months earlier with a foreign-exchange loss of 40.8 million. Quarterly revenue decreased by almost half to 750 million baht from 1.4 billion.
Nine-month earnings declined to 720 million baht from 2.6 billion in the same period last year as total revenue was more than halved from 5.3 billion baht to 2.6 billion.
"The main reasons why earnings have dropped compared to a year ago is because we have a much smaller fleet and earnings per day per ship are lower than the year before," said managing director Khalid Hashim.
PSL operates 21 ships in its fleet compared to more than 30 a year ago.
The company's services are quoted in dollars, so they don't command what they used to when converted to baht. Even so, the strength of the baht has had no impact on its overall operations, said Mr Hashim.
"Our net profit as expressed in baht would be lower when the baht is stronger but our liabilities and expenses, on the other hand, are all taken in dollars. At the end of the day, it makes no real difference to us if the baht is stronger," he said.
Earnings per day per ship and operational costs per day per ship were in line with the company's expectation, staying at $12,425 and $4,750 respectively for the quarter, he added.
He noted that PSL had not changed its policy of paying dividends every quarter.
"Quarterly dividends have been paid at PSL for the last few years and this trend will not change in the future so long as the company remains profitable and has sufficient cash on hand to make these payments," he said.
Daowadee Teera-apisakkul, a sector analyst from Kim Eng Securities, said PSL's quarterly results are better than the brokerage's estimates with only a marginal impact from the baht appreciation.
Kim Eng is likely to upgrade PSL's results for the year after a recent downgrade on concerns over the baht and an oversupply of ships in the market. PSL aims to buy second-hand ships to replace 25 aging vessels that have been sold. Two used ships were acquired since late last year as prices have yet fallen enough.
"Once prices drop to an attractive enough level we will jump in and buy at least 23 more second-hand ships from the market," Mr Hashim said.
The carrier has also ordered 18 new ships with deliveries due through 2014.As far as the shipping rate is concerned, Mr Hashim said the Baltic Dry Index (BDI) had defied gravity and logic for far too long.
"It is time that the reality of the huge influx of brand new ships and the clouds on the demand side bring it down to more realistic levels," he added.
Shares of PSL closed yesterday on the Stock Exchange of Thailand at 19.10 baht, down 40 satang, in trade worth 48 million baht.
Net profit was 173.9 million baht in the quarter to Sept 30 compared with 703 million a year earlier, but rose 10% from three months earlier with a foreign-exchange loss of 40.8 million. Quarterly revenue decreased by almost half to 750 million baht from 1.4 billion.
Nine-month earnings declined to 720 million baht from 2.6 billion in the same period last year as total revenue was more than halved from 5.3 billion baht to 2.6 billion.
"The main reasons why earnings have dropped compared to a year ago is because we have a much smaller fleet and earnings per day per ship are lower than the year before," said managing director Khalid Hashim.
PSL operates 21 ships in its fleet compared to more than 30 a year ago.
The company's services are quoted in dollars, so they don't command what they used to when converted to baht. Even so, the strength of the baht has had no impact on its overall operations, said Mr Hashim.
"Our net profit as expressed in baht would be lower when the baht is stronger but our liabilities and expenses, on the other hand, are all taken in dollars. At the end of the day, it makes no real difference to us if the baht is stronger," he said.
Earnings per day per ship and operational costs per day per ship were in line with the company's expectation, staying at $12,425 and $4,750 respectively for the quarter, he added.
He noted that PSL had not changed its policy of paying dividends every quarter.
"Quarterly dividends have been paid at PSL for the last few years and this trend will not change in the future so long as the company remains profitable and has sufficient cash on hand to make these payments," he said.
Daowadee Teera-apisakkul, a sector analyst from Kim Eng Securities, said PSL's quarterly results are better than the brokerage's estimates with only a marginal impact from the baht appreciation.
Kim Eng is likely to upgrade PSL's results for the year after a recent downgrade on concerns over the baht and an oversupply of ships in the market. PSL aims to buy second-hand ships to replace 25 aging vessels that have been sold. Two used ships were acquired since late last year as prices have yet fallen enough.
"Once prices drop to an attractive enough level we will jump in and buy at least 23 more second-hand ships from the market," Mr Hashim said.
The carrier has also ordered 18 new ships with deliveries due through 2014.As far as the shipping rate is concerned, Mr Hashim said the Baltic Dry Index (BDI) had defied gravity and logic for far too long.
"It is time that the reality of the huge influx of brand new ships and the clouds on the demand side bring it down to more realistic levels," he added.
Shares of PSL closed yesterday on the Stock Exchange of Thailand at 19.10 baht, down 40 satang, in trade worth 48 million baht.