STX Pan Ocean achieved record high sales and profit for the nine months ended 30 September 2008 (“9MFY08”). It recorded sales of US$7,543 million for 9MFY08, an increase of US$3,847 million, or 104.1%, compared to the corresponding period last year (“9MFY07”). Despite the deterioration of the Baltic Dry Index (BDI) in recent months, STX attributed its robust performance in this period to a number of reasons that include its stable income stream, which is due to the fact that the Group cargo business accounted for approximately 60% of its overall business, as well as good margins in its non-dry bulk business.
The Group’s large bulk service, which mainly operates Cape size and Panamax size bulk carriers, contributed US$3,024 million to sales during the period, an increase of 114.2% from US$1,412 million in 9MFY07. The increased sales of large bulk service were mainly driven by the increase in charters under China’s strong demand for raw materials such as iron ore and coal. This service transported 35.6 million tonnes in 9MFY08, an increase of 7.4 million tonnes, or 26.2%, from 28.2 million tonnes in the corresponding period 2007.
Sales from tramper service grew by 49.4% from US$1,660 million in 9MFY07 to US$2,480 million in 9MFY08, mainly due to higher freight rates and increase in cargo volume of our chartered-in vessels. This segment transported 19.3 million tonnes in the period, a 51.8% increase over the last corresponding period.
Breakbulk liner services, which operate on relatively designated ocean routes as compared to tramper service, recorded US$1,378 million of sales during the period, representing a 79.5% year-on-year increase. This was mainly due to additional 15.1% of voyages from 518 in 9MFY07 to 596 voyages in 9MFY08, while transferred cargo
volume increased by 8.5%.
While dry bulk service segments posted record performances, STX’s non-dry bulk services also achieved increased sales of US$658 million year to date in FY08, representing a 80.7% increase as compared to US$364 million in 9MFY07. In the non-dry bulk service segments, sales from the container service increased to US$330 million, compared to US$186 million in 9MFY07, primarily due to the expansion of the Group’s operating fleet for its newly developed routes in the Far East, Indian continent, the Middle East and Australia and more long-term chartered-in vessels secured to improve cost competiveness.
Sales from the Group’s tanker service surged 101.5% to US$262 million, from US$130 million in 9MFY07. This was mainly due to the increased volume of Clean Petroleum Products, arising from the expansion of STX’s Mid-Range (“MR”) tanker fleet, and crude oil from the four long-term chartered Very Large Crude-Oil Carriers (“VLCCs”).
Sales from Pure Car and Truck Carrier (“PCTC”) service increased 36.9% from the corresponding period in 2007, to US$66 million as a result of increases in both vessel charters and cargo volume.
Cost of sales for 9MFY08 increased by 106.5%, or US$3,484 million, to US$6,756 million from US$3,271 million in the corresponding period of 2007. The increase was mainly attributed to a rise in ship hire cost of US$2,375 million, an increase of 101.8% compared to that in 9MFY07, in tandem with the expansion of our chartered-in operating fleet and the buoyant market during the period. Meanwhile, bunker fuel cost in 9MFY08 increased by 126.9% or US$474 million to US$847 million, from US$373 million in 9MFY07 largely due to the surge in oil prices in the second and third quarters of 2008.
In addition, in line with the Group’s increase in voyages, voyage operation costs and other fixed costs increased by US$637 million to US$1,202 million, from US$565 million in the same period in 2007.
Due to the factors mentioned above, gross profit for 9MFY08 increased by 85.2%, or US$362 million to US$787 million, as compared to US$425 million in 9MFY07.
Other operating losses amounted to US$30million compared to US$20 million in the last corresponding period, which mainly due to foreign exchange losses.
The depreciation of the Korean Won (“KRW”) against the US dollar resulted in US$33 million of foreign exchange loss in 9MFY08 compared to a gain of US$2 million in the corresponding period last year.
At the same time, the foreign exchange loss incurred from financial assets stated in KRW, amounting to US$88 million was posted to Finance costs-net.
Selling and marketing expenses in 9MFY08 increased by 23.7% to US$62 million compared to the corresponding period last year. This was largely due to increases in commission fees, bad debt expenses and personnel expenses, which rose in tandem with the increase in sales. Administrative expenses also increased by 59.4% to US$26 million compared to the corresponding period last year.
Depreciation and amortisation costs increased by 31.2% to US$50 million in 9MFY08 from US$38 million in 9MFY07 largely due to the depreciation of newly delivered vessels and amortisation costs relating to the development of the Group’s Enterprise Resource Planning (“ERP”) systems.
The factors mentioned above contributed to the operating profit of US$670 million in 9MFY08, as compared to US$338 million in the corresponding period last year.
The Group’s interest income rose 289.1% to US$21.7 million from US$5.6 million in 9MFY07. This was mainly due to the investment in securities from the proceeds from the IPO, which amounted to US$600 million. Interest expense increased marginally by 4.3% to US$13.6 million, due to capitalisation of borrowing cost. Share of profit of joint ventures increased by US$3 million due to the strong financial performance of joint ventures.
Current assets of the Group increased by 9.4% to US$1,708 million as at 30 September 2008 compared to US$1,556 million as at the end of 2007. This was due to increase in trade and other receivables and derivative financial instruments by 21.8% and 201.8% respectively. Derivative financial instruments represent the current portion of valuation of Forward Freight Agreements, which will be settled within one year.
Non-current assets of the Group grew by 35.9% to US$2,198 million as at 30 September 2008 from US$1,617 million as at 31 December 2007, mainly attributable to the acquisition of new vessels and construction in progress.
Total liabilities of the Group increased by 22.2% to US$1,596 million at 30 September 2008, from US$1,307 million as at 31 December 2007, mainly due to the increase in borrowings relating to ship-financing.
With its strong focus on core business sectors, the Group generated US$472 million of net cash inflow from operating activities in 9MFY08, representing a 43.2% increase from the corresponding period last year.
The Group’s large bulk service, which mainly operates Cape size and Panamax size bulk carriers, contributed US$3,024 million to sales during the period, an increase of 114.2% from US$1,412 million in 9MFY07. The increased sales of large bulk service were mainly driven by the increase in charters under China’s strong demand for raw materials such as iron ore and coal. This service transported 35.6 million tonnes in 9MFY08, an increase of 7.4 million tonnes, or 26.2%, from 28.2 million tonnes in the corresponding period 2007.
Sales from tramper service grew by 49.4% from US$1,660 million in 9MFY07 to US$2,480 million in 9MFY08, mainly due to higher freight rates and increase in cargo volume of our chartered-in vessels. This segment transported 19.3 million tonnes in the period, a 51.8% increase over the last corresponding period.
Breakbulk liner services, which operate on relatively designated ocean routes as compared to tramper service, recorded US$1,378 million of sales during the period, representing a 79.5% year-on-year increase. This was mainly due to additional 15.1% of voyages from 518 in 9MFY07 to 596 voyages in 9MFY08, while transferred cargo
volume increased by 8.5%.
While dry bulk service segments posted record performances, STX’s non-dry bulk services also achieved increased sales of US$658 million year to date in FY08, representing a 80.7% increase as compared to US$364 million in 9MFY07. In the non-dry bulk service segments, sales from the container service increased to US$330 million, compared to US$186 million in 9MFY07, primarily due to the expansion of the Group’s operating fleet for its newly developed routes in the Far East, Indian continent, the Middle East and Australia and more long-term chartered-in vessels secured to improve cost competiveness.
Sales from the Group’s tanker service surged 101.5% to US$262 million, from US$130 million in 9MFY07. This was mainly due to the increased volume of Clean Petroleum Products, arising from the expansion of STX’s Mid-Range (“MR”) tanker fleet, and crude oil from the four long-term chartered Very Large Crude-Oil Carriers (“VLCCs”).
Sales from Pure Car and Truck Carrier (“PCTC”) service increased 36.9% from the corresponding period in 2007, to US$66 million as a result of increases in both vessel charters and cargo volume.
Cost of sales for 9MFY08 increased by 106.5%, or US$3,484 million, to US$6,756 million from US$3,271 million in the corresponding period of 2007. The increase was mainly attributed to a rise in ship hire cost of US$2,375 million, an increase of 101.8% compared to that in 9MFY07, in tandem with the expansion of our chartered-in operating fleet and the buoyant market during the period. Meanwhile, bunker fuel cost in 9MFY08 increased by 126.9% or US$474 million to US$847 million, from US$373 million in 9MFY07 largely due to the surge in oil prices in the second and third quarters of 2008.
In addition, in line with the Group’s increase in voyages, voyage operation costs and other fixed costs increased by US$637 million to US$1,202 million, from US$565 million in the same period in 2007.
Due to the factors mentioned above, gross profit for 9MFY08 increased by 85.2%, or US$362 million to US$787 million, as compared to US$425 million in 9MFY07.
Other operating losses amounted to US$30million compared to US$20 million in the last corresponding period, which mainly due to foreign exchange losses.
The depreciation of the Korean Won (“KRW”) against the US dollar resulted in US$33 million of foreign exchange loss in 9MFY08 compared to a gain of US$2 million in the corresponding period last year.
At the same time, the foreign exchange loss incurred from financial assets stated in KRW, amounting to US$88 million was posted to Finance costs-net.
Selling and marketing expenses in 9MFY08 increased by 23.7% to US$62 million compared to the corresponding period last year. This was largely due to increases in commission fees, bad debt expenses and personnel expenses, which rose in tandem with the increase in sales. Administrative expenses also increased by 59.4% to US$26 million compared to the corresponding period last year.
Depreciation and amortisation costs increased by 31.2% to US$50 million in 9MFY08 from US$38 million in 9MFY07 largely due to the depreciation of newly delivered vessels and amortisation costs relating to the development of the Group’s Enterprise Resource Planning (“ERP”) systems.
The factors mentioned above contributed to the operating profit of US$670 million in 9MFY08, as compared to US$338 million in the corresponding period last year.
The Group’s interest income rose 289.1% to US$21.7 million from US$5.6 million in 9MFY07. This was mainly due to the investment in securities from the proceeds from the IPO, which amounted to US$600 million. Interest expense increased marginally by 4.3% to US$13.6 million, due to capitalisation of borrowing cost. Share of profit of joint ventures increased by US$3 million due to the strong financial performance of joint ventures.
Current assets of the Group increased by 9.4% to US$1,708 million as at 30 September 2008 compared to US$1,556 million as at the end of 2007. This was due to increase in trade and other receivables and derivative financial instruments by 21.8% and 201.8% respectively. Derivative financial instruments represent the current portion of valuation of Forward Freight Agreements, which will be settled within one year.
Non-current assets of the Group grew by 35.9% to US$2,198 million as at 30 September 2008 from US$1,617 million as at 31 December 2007, mainly attributable to the acquisition of new vessels and construction in progress.
Total liabilities of the Group increased by 22.2% to US$1,596 million at 30 September 2008, from US$1,307 million as at 31 December 2007, mainly due to the increase in borrowings relating to ship-financing.
With its strong focus on core business sectors, the Group generated US$472 million of net cash inflow from operating activities in 9MFY08, representing a 43.2% increase from the corresponding period last year.