SET-listed Precious Shipping Plc (PSL) expects its financial results to weaken in the final quarter and next year unless it acquires another second-hand ship.

Thailand’s second-largest dry-bulk carrier would also miss its targeted
earnings per ship per day of US$14,000 this year, managing director
Khalid Hashim said yesterday.

PSL has sold 20 ageing ships from its fleet of 44 this year and aims to
sell another five by the first quarter of 2010. Under a fleet
rejuvenation plan, all 25 ships will be replaced with more recent
second-hand ones, but only one has been replaced so far.

“We have no fixed timeframe but all the ships we have sold will be
replaced. It depends on how the market behaves in the next 12 months,”
he said.

“Our performance will certainly weaken this quarter, and possibly next
year as well, because the number of our ships is reduced.”

PSL’s third-quarter net profit fell by 52 percent year-on-year and 35
percent from the previous quarter to 703 million baht as revenue halved
year-on-year to 1.15 billion.

Nine-month earnings dropped 29 percent from 3.7 billion baht to 2.63
billion on revenue of 4.62 billion baht, down 27 percent from 6.3
billion baht a year earlier.

Earnings per ship per day were $13,110 in the third quarter, down from
$17,611 a year earlier, prompting management to concede that its 2009
target of $14,000 would not be achieved, said Mr Hashim.

He added that the current Baltic Dry Index (BDI) of commodity freight
rates would decline from the current level of 3,500 for the rest of the
year and remain low until the first half of 2011.

“About 3,500 is too high. It should be much lower. 2010 will be a
challenging period and I don’t expect much happening in the first half
of 2011,” he said.

Analysts were downbeat on PSL’s outlook, due to fleet downsizing and
reduced time charter rates, which may not improve until the latter half
of 2010.

Kim Eng Securities said it might downgrade PSL’s 2009 earnings estimate
of 3.31 billion baht after lower-than-expected third-quarter results.
It forecasts net profit will fall 25.7 percent in 2010, despite a
revival in dry-bulk business.

Mr Hashim said a Japanese-built ship, with a capacity of 29,870
deadweight tonnes (DWT), would be delivered this year. The
four-year-old vessel will bring PSL’s aggregate capacity to 631,070
DWT.

PSL has ordered 18 new ships, three to be handed over next year and the
rest through 2013. It has a $400-million credit facility for the
purchases and will use $117.6 million of its own cash.

Shares of PSL closed yesterday on the SET at 19.10 baht, down 10 satang.

Source: Bangkok Post

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