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Even though its consolidated net profit for the fourth quarter ended March 31, 2013 jumped to Rs 83.73 crore from Rs 39.19 crore in the same period of FY12, GE Shipping maintains that the operating environment continues to be challenging.
The company reported a drop in its total income in the given quarter to Rs 775.28 crore from Rs 826.30 crore in the same quarter of last year. Its expenses, too, dropped to Rs 491.56 crore from 505.36 crore in the fourth quarter of FY12.
The major differentiating factor between the two comparable quarters was the impairment charges of Rs 31.78 crore. G Shivakumar, CFO, GE Shipping, in a conference call with the investors said that the impairment charges were on the back of equipment, like cranes, which the company had bought to put-in its vessels. These equipments have been canceled and hence the company has booked impairment charges on the same.
The company said, “The charter rates for large asset classes in the dry bulk sector remained depressed throughout the quarter mainly due to lower iron ore imports from Brazil to Asia and lower coal shipments from Australia due to heavy floods.” It further said that the improvement is expected in grains exports from the South American market.
The company has a total of 22 tankers with 9 crude and 12 product carriers. WIth 9 dry bulk carriers, its total fleet-size stands at 31.
The International Energy Agency (IEA) says that it expects the oil demand growth to be muted in 2013, at 0.9%. However, the company expects the crude segment to perform relatively better in the coming years.
The company said, “Demand for offshore support and drilling services has remained reasonably strong over the last few years, with oil prices still well above the threshold of E&P profitability. However, with the wave of newbuilding deliveries expected primarily from yards located in Southeast Asia and China, excessive addition in the coming years could cause some concerns on utilisation rates and going forward.”
Shivakumar said that in the newest rig in the company was operational for around 45 days in the fourth quarter as it was delivered to the company on January 17. He said that there has been new ship addition in its fleet but it is not enough to compensate the drop in the drilling rates.
On the anchor tugs, he said that the current order books at the shipyards worldover isn't huge but the rates are quite low. The company doesn’t expect the rates to down further but there is no hope of rates to pick up substantially.
