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TTA Posts 2010 Third Quarter Financial Results

Back Aug 17, 2010

(Bangkok, 16 August 2010) -- Thoresen Thai Agencies Public Company Limited ("TTA") reported third quarter net profits of Baht 185.13 million and earnings per share of Baht 0.26 for the three-month period that ended on 30 June 2010 ("3Q FY 2010"), compared with net profits and earnings per share of Baht 352.62 million and Baht 0.50 for the same three-month period in 2009 ("3Q FY 2009").

"TTA's diversified lines of business delivered mixed results in the last quarter," TTA President & CEO M.L. Chandchutha Chandratat disclosed.  "Over the last 12 months, TTA has achieved better diversification of revenues, with freight income now at 50% of consolidated revenues. However, the financial and operating performance of certain subsidiaries remains below average, and we are taking active steps to address these concerns."

"Over the past 18 months, TTA has strategically pursued an investment strategy focusing on three key business groups to ensure more balanced and diversified revenues and earnings. This investment strategy has built positive momentum in our businesses, and we expect to generate sustainable returns over the next few years after their integration," said M.L. Chandchutha.

 

Segment Analysis

The Transport Group, which oversees dry bulk shipping, shipping services, and oil and gas tanker businesses, had a solid 3Q FY 2009, achieving quarterly net profit contributions of Baht 434.42 million to TTA, representing a 6.56% year-on-year increase from 3Q FY 2009.

Dry bulk freight markets performed well during the last quarter, even considering the period in which the Baltic Dry Index ("BDI") declined 35 consecutive days, mainly due to China's slower imports and greater vessel supply. "Our current new build plans form part of our strategic goal of operating a fleet of about 40 owned and chartered-in vessels. We prefer to own most of our vessels and will continue to seek opportunities to buy more second-hand vessels at competitive prices," revealed M.L. Chandchutha.

The Infrastructure Group reported stronger profits in the third quarter, making a net profit contribution of Baht 139.24 million this quarter, as compared to a net loss of Baht 1.84 million in 3Q FY 2009.

The Infrastructure Group consists of a coal logistics business, fertiliser and logistics business, third party logistics business, and ship supply and warehouse businesses.

"The improved performance was driven not only by Baconco, which reported strong fertiliser sales and utilisation of our warehousing capacity and logistics management but also UMS, which is poised to sell more coal in the coming months," M.L. Chandchutha added. 

The Energy Group posted a negative Baht 149.75 million contribution to TTA due to underutilisation of assets in the subsea engineering segment and offshore drilling operations. 

"Asset utilization of Mermaid's four DP2 dive support vessels was only 35.70%. At the same time, additional depreciation and interest expenses for the new-buildvessels began. This business has not generated sufficient operating cash flows, and we are contemplating areas where immediate improvement can be achieved," said M.L. Chandchutha.

 

Outlook

TTA expects limited recovery in Chinese imports of dry bulk cargo, despite the downward trend of the BDI in the past few months. "It will be interesting to see how strong the Chinese government wants to curb speculation in the real estate sector, as this issue has a direct impact on imports," the CEO said.

M.L. Chandchutha observed reasonable utilisation rates for tender rigs business. "As oil prices stabilise and move upwards in line with the global economic recovery, additional requirements for tender rigs as well as other types of drilling rigs are inevitable. We should see relative stability in day rates in the near future."

"Given the anticipation of improved demand and supply conditions for drilling services, we believe any investment in new equipment now will cost less than if such projects were entered into later and enable us to secure more client contracts from a position of competitive advantage," he emphasised.

As for the Infrastructure Group, TTA forecast the coal sales and prices would stabilise or increase over the next few months in line with encouraging market conditions. Many public infrastructure projects have been re-activated, and most small to medium-sized companies are reporting sales growth as local and international economies recover.

 

About TTA

Thoresen Thai Agencies Public Company Limited ("TTA") is a strategic investment holding company listed on the Stock Exchange of Thailand.  Its investment strategy is to grow through a balanced and diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally.  Previously, TTA has only invested and operated in the dry bulk shipping and related shipping services business.   Then, the company has also expanded its investments into other business areas, such as offshore services through Mermaid Maritime Public Company Limited, fertilisers and logistics through Baconco Co., Ltd., coal-related businesses through Merton Group (Cyprus) Limited and Unique Mining Services Public Company Limited, and petroleum tankers through Petrolift, Inc.