Lauritzen Q1: 25.6m dollar in red

The net result of J. Lauritzen for the first quarter 2013 was a loss of 25.6m dollar, against a profit of 1.1m dollar in Q1 2012. EBITDA was 9.4m dollar for the first quarter of 2013 against USD 37.9m in the first quarter of 2012, which included non-recurring income from settlements and EBITDA from Accommodation and Support Vessel Dan Swift.
“The world economic and political uncertainty and the tough business environment for international shipping that prevailed throughout 2012 continued into the first quarter of 2013. EBITDA for the first quarter of 2013 was in line with our expectations and down compared to the first quarter of 2012, but better than in the fourth quarter of 2012. We maintain our expectations for full-year EBITDA of USD 60-80m in spite of the continuous challenging business conditions for maritime transport, in particular in the dry bulk segment”, says Jan Kastrup-Nielsen, President and CEO.
EBITDA for the full year is as earlier announced expected to be in the range of USD 60-80m, despite the world economic and political uncertainty and the sustained depressed trading conditions in the dry bulk segment.
One of Lauritzen Kosan’s pressurized gas carriers built in 1998 was sold late April 2013.
Additionally, JL’s share of an MR product tanker was sold early May 2013. The two transactions will cause a combined minor book loss of USD (2.1)m but have a positive cash effect of USD 11m.
Lauritzen Bulkers
The depressed dry bulk market recorded at the end of 2012 continued into 2013 and spot market earnings for handysize opened on a very low note with supramax rates in steep decline. Seasonal grain movements were behind the pick-up from February sending the spot market to levels comparable to the latter part of the first quarter of 2012, but still at unsatisfactory levels. Total number of ship days was 10,648, up 7% compared to 9,998 in the first quarter of 2012.
EBITDA was USD (10.4)m compared to USD 6.9m in 2012 and operating income was USD (20.3)m compared to USD (4.9)m in 2012. The decline was primarily due to continuous difficult market conditions and settlements received in the first quarter of 2012. EBITDA was in the lower range of expectations.
Lauritzen Kosan
Weak economic developments, mainly in Europe, impacted petrochemical gas movements with a slight negative impact on spot market rates during the first quarter. Weather related movements supported a spot market recovery for smaller vessel sizes from January onwards. Total number of ship days was 3,891 compared to 3,857 in the first quarter of 2012.EBITDA was USD 8.7m compared to USD 13.9m in 2012 and operating income was USD 2.0m compared to USD 7.1m in 2012. The decline was due to difficult market conditions, in particular in Europe and declining shipments out of the Middle East mainly as a result of the continuation of sanctions against Iran. EBITDA was in line with expectations.
Lauritzen Tankers
Due to seasonal factors and stronger economic fundamentals in the USA, spot market rates for MR product tankers held up quite strongly during the first quarter.Total number of ship days was 1,150 compared to 1,180 in the first quarter of 2012. EBITDA was USD 6.5m compared to USD 3.9m in 2012 and operating income was USD 4.2m compared to USD 2.0m in 2012. The improvement was mainly due to strengthening of the spot
market. EBITDA was better than expected.
Lauritzen Offshore
EBITDA was USD 6.8m compared to USD 15.0m in 2012 and operating income was USD 3.8m compared to USD 9.5m in 2012. Results were in line with expectations and reflect that JL’s Accommodation and Support Vessel activities were sold to part-owned Axis Offshore Pte. Ltd. as per 1 July 2012. EBITDA was in line with expectations.
Joint ventures
JL’s share of profit in joint ventures amounted to USD (2.4)m compared to USD 2.0m in the first quarter of 2012. The negative result was due to losses in joint ventures related to the dry bulk business, partly as a result of sale of assets
Outlook for 2013
Lauritzen reiterate their previous expectation that economic growth will be somewhat subdued during the first half of 2013. A number of indicators suggest that economic growth will strengthen as the year progresses. Once economic growth rises, we expect to see inventories rebuilding which will contribute to seaborne trade growth.
Overall, market conditions are unchanged. An expected decline in supply growth together with rising demand growth is anticipated to lead to improved market conditions in dry bulk during the second half of the year. The market for smaller gas carriers is also expected to see a slight market improvement in the second half. Seasonal factors may reduce spot market earnings for MR product tankers in coming months with improved vessel utilization towards the end of the year.
JL maintains its expectations for an EBITDA for the full year of USD 60-80m despite the world economic and political uncertainty and the sustained depressed trading conditions in the dry bulk segment.
The net result for 2013 is anticipated to remain unsatisfactory with an expected loss of USD (75-100)m. In JL’s continuous efforts to adjust the tonnage portfolio, additional sale of assets may negatively affect the result for 2013, but have a positive effect on JL’s cash position.
As of 1 April, 58% of remaining vessel days in 2013 are open. Freight rate changes of open vessel days of USD 1,000/day will impact the full-year profit before tax by about USD 15m.
Source: J. Lauritzen