ENTH

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TTA Reports Financial 2010 First Quarter Results

Back Feb 17, 2010

(Bangkok, 16 February 2010)  Thoresen Thai Agencies Plc ("TTA") reported net loss of Baht 65.09 million and losses per share of Baht 0.09 for the fiscal First Quarter ended 31 December 2009.  This compares with net profits and earnings per share of Baht 897.13 million and Baht 1.27 respectively for 1Q FY2009.

TTA announced total operating revenues for 1Q FY2010 at Baht 4,681.72 million, total operating expenses at Baht 4,599.29 million, resulting in operating profits of Baht 82.43 million, a 93.12% year-on-year fall from an operating profits of Baht 1,198.14 million during the same period last year or a 87.01% quarter-on-quarter drop for the quarter ended on 30 September 2009 (4Q FY2009).

TTA encountered a decrease in profits due to net profit from Transport Group dropped dramatically as it faced a lowering of freight rates as well as the current competitive environment in the dry bulk shipping market during the 1st quarter of 2010. However, another 2 core businesses still contributed satisfactory net profit and comfort the Thoresen Group to balance its revenue.

Baht millions
1Q FY 2010
1Q FY 2009
YoY %
4Q FY 2009
QoQ %
Transport
19.92
275.95
-92.78%
204.31
-90.25%
Infrastructure
73.46
-0.97
7,673.20%
12.28
498.21%
Energy
65.99
181.37
-63.62%
67.68
-2.50%
Corporate1
-224.46
440.78
-150.92%
180.53
-224.33%
Total
-65.09
897.13
-107.26%
464.80
-114.00%

Note: Corporate1 (TTA, the holding company, and includes inter-company eliminations)

 

The Transport Group includes dry bulk shipping and a number of shipping services companies

"Under the Transport Group, the dry bulk shipping operations recorded a net loss of Baht 41.39 million this quarter excluding exchange gains, a decrease from the net profit of Baht 174.17 million for 1Q FY 2009 and an even larger decline from the net profit of Baht 209.71 million for 4Q FY 2009.  The loss registered in 1Q FY2010 are primarily due to lower time charter rates, significantly fewer numbers of owned and chartered-in vessel days, and coupled with overall higher owner expense per day," said President & CEO M.L. Chandchutha

"Given the considerable erosion of liner freight rates and the liner service having repeatedly underperformed on profitability, TTA has decided to terminate the liner operation. As for our liner fleet, we expect to sell or scrap some vessels, while the remaining ones will be redeployed to more profitable services," revealed M.L. Chandchutha.

During 1Q FY 2010, TTA sold a total of three vessels. However, the company also received the first new-build vessel, a 53,350 deadweight tonnes capacity Thor Friendship, from Oshima Shipyard Co., Ltd. in January this year. There are four more new-build vessels scheduled for delivery by the end of 2011.  

Overall, we expect the BDI to recover slowly and remain steady for the remaining time of the year. We believe China will remain the major driving force for the rising demand for dry bulk capacity. However, we fear that the BDI is likely be capped by the new-building deliveries, which have accelerated over the past months.  We expect positive double digit net growth of vessel supply over the next year or two.

The shipping services businesses made a net profit contribution of Baht 7.40 million to TTA's financial results, a 91.54% decrease YoY and an 85.03% QoQ.

The Infrastructure Group consists of Unique Mining Services Public Company Limited ("UMS"), EMC Gestion S.A.S./Baconco Co., Ltd., GAC Thoresen Logistics Ltd., and Chidlom Marine Services & Supplies Ltd.

Unique Mining Services Public Company Limited ("UMS") recorded a consolidated net profit of Baht 4.04 million for the 2-month period ended 31 Dec 2009 and contributed Baht 1.96 million of earnings to TTA's financial results. We consolidated Baht 410.43 million of UMS's sales and a gross profit of Baht 74.00 million. UMS sold approximately 0.24 million tonnes of coal during 1Q FY 2010 and about 1.2 million tonnes for 2009.

We consolidated 48.46% of UMS's fourth quarter 2009 earnings in 1Q FY 2010. Starting from 2Q FY 2010, TTA will consolidate 89.55% of UMS's earnings into its financial results.

UMS's plan to reduce the coal dust inventory is to set up a newly established briquette project. This project is expected to add value to the otherwise low value coal dust inventory as well as to expand the market. The briquette project is expected to start commissioning in March 2010. The total production capacity of the coal briquette is approximately 40,000 tons per month.

During 1Q FY2010, Baconco contributed Baht 706.61 million of fertiliser sales and net profit of Baht 79.80 million to the Infrastructure Group. "Given that the fertiliser business is very cyclical and the second half of the year usually outperforms the first half, we do not expect significant contributions from Baconco's fertiliser operation for the next two quarters. We have planned for a capacity of 200,000 metric tonnes in warehousing services in FY 2010. Until our warehousing and logistic services operation begins commercial operation significantly over the next few months, the main profit driver for Baconco in FY 2010 is still the selling and manufacturing of fertilisers," he added.

The Energy Group comprises 57.14% owned Mermaid Maritime Public Company Limited ("MMPLC") and 21.18% owned Merton Group (Cyprus) Ltd.

"MMPLC is the sole earnings contributor to the Company in 1Q FY 2010 under the Energy Group. MMPLC's consolidated 1Q FY2010 net profit is Baht 115.49 million and delivered Baht 65.99 million to our bottom line.  Mermaid Offshore Services Ltd. ("MOS") contributed 57.20% to MMPLC's net profit and Mermaid Drilling Ltd. ("MDL") contributed 2.01% to MMPLC's net profit," said M.L. Chandchutha.

During this quarter, MMPLC successfully raised Baht 3,592.65 million from a right issue. The proceeds of the issue will be used to finance its expansion plans.

Since November 2009, MOS took delivery of two new-builds - Mermaid Sapphire in November 2009 and Mermaid Asiana in January 2010. MOS is expecting another new-build, Mermaid Endurer, which is scheduled to be delivered in the third financial quarter of FY 2010. By the end of FY 2010, MOS will have nine (9) owned vessels.

The drilling segment generated 24.40% of MMPLC's total service income this quarter.  We are reviewing various opportunities, both in the second-hand market and new-build market for future acquisition of drilling assets that will utilise funds from our recent rights issue.

"Over the past year, TTA has been aggressively expanding to include other new businesses to ensure more balanced and diversified earnings growth for the company apart from depending on only Transport business which tend to slowdown in over the next 2-3 years. TTA is convinced that the profits from another 2 core businesses will reinforce a balance of profits of TTA in the other next quarters" M.L Chandchutha concluded

 

About TTA
Thoresen Thai Agencies Public Company Limited is amongst the top 50 companies listed on the Stock Exchange of Thailand with high trading liquidity. Its investment strategy is to grow through a diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally.  TTA is recognised as a leader in the dry bulk shipping industry.  The company has also expanded its investment into other business areas, such as offshore services through Mermaid Maritime Public Company Limited, fertilisers and logistics through Baconco Co., Ltd., and coal-related businesses through Merton Group (Cyprus) Limited and Unique Mining Services Public Company Limited.

 

For further information, please contact:
Thoresen Thai Agencies PCL.  
Ravisada Angkeeros or Ornsutee Kanchanomai        
Tel: 02 254 8437 ext. 393 or 290                                    
Email: ravisada_a@thoresen.com OR ornsutee_k@thoresen.com