Rickmers Maritime demonstrates resilience amidst uncertainties in FY2009
| | Rickmers Trust Management Pte. Ltd. (“RTM”), Trustee-Manager of Mainboard-listed Rickmers Maritime (the “Trust”), yesterday announced the financial performance of the Trust for the fourth quarter and financial year ended 31 December 2009 (“FY2009”).
FINANCIAL AND OPERATING REVIEW
For the quarter ended 31 December 2009 (“4Q2009”), charter revenue
registered a healthy improvement of 29% to US$38.13 million, compared
with US$29.56 million for the same period last year. On a full year
basis, charter revenue rose 43% to US$146.28 million from US$102.11
million a year earlier. The strong performance came on the back of
revenue contributions from three new vessels delivered during the year
– MOL Destiny, MOL Devotion and Hanjin Newport.
As a result of higher charter revenue, cash flow from operating
activities rose 19% to US$27.59 million in 4Q2009 (4Q2008: US$23.11
million). Accordingly, income available for distribution increased 12%
year-on-year to US$17.72 million in 4Q2009 (4Q2008: US$15.77 million).
For the full year, cash flow from operating activities improved 44% to
US$112.09 million (FY2008: US$77.96 million) while income available for
distribution posted a 36% growth to US$76.09 million (FY2008: US$55.85
million).
Net profit rose 112% to US$15.25 million in 4Q2009 ($Q2008: US$7.18
million), primarily due to the accelerated amortisation of Kaethe C.
Rickmers’ (formerly Maersk Djibouti) deferred income from charter
contract resulting from its early re-delivery. For the year under
review, net profit improved 18% year-on-year to US$40.74 million
(FY2008: US$34.44 million) as the increase in earnings was offset
against impairment charges of US$7.50 million to take into account
Kaethe C. Rickmers’ early re-delivery, as well as net unrealised losses
of US$5.36 million on two of the Trust’s interest rate swaps which were
deemed ineffective as cash flow hedges due to the invocation of the
market disruption clause on one of the loans and the non-delivery of
Hanjin Milano. These unrealised losses did not have any cash flow
impact.
Cash and cash equivalents at 31 December 2009 stood at US$110.72 million.
Mr Thomas Preben Hansen, Chief Executive Officer of RTM, said, “2009
has been a year of unprecedented challenges for the shipping industry,
which was plagued by poor consumer demand, depressed freight rates and
significant overcapacity. Despite the difficulties, our business model
of attaching long-term fixed-rate charters to our vessels protected our
cash flow against the surrounding uncertainties, allowing us to
continue enjoying healthy increases in our key financial indicators,
including charter revenue, operating cash flows and income available
for distribution, throughout the year.”
DISTRIBUTION
Rickmers Maritime will distribute 0.57 US cents per unit for 4Q2009,
representing a payout of 14% of income available for distribution.
Total distribution for the year will amount to US$16.57 million, which
represents 22% of income available for distribution.
Mr Quah Ban Huat, CFO of RTM said, “We are grateful for the patience and
understanding of our unitholders as we continue our discussions with the lending banks.
While the Trust has enjoyed a good year in terms of our financial and
operational performance, our unresolved financing issues have
necessitated the continuation of our cash conservation efforts.”
As negotiations with Rickmers Maritime’s lending banks are still
ongoing, the Trust is unable to provide any forward guidance on
distribution.
FINANCING
Since the beginning of the year, RTM has actively engaged its creditors
in discussions on the resolution of the Trust’s financing issues
including its value-to-loan covenants, the refinancing of its US$130
million Top-Up loan facility maturing in April 2010 and the financing
of its orderbook. Since the onset of discussions, RTM has exchanged
numerous proposals with the creditors in an effort to resolve the
outstanding issues. However, due to the complexity of the matter and
differing views between the Trust and its various stakeholders, none of
these proposals have thus far been accepted.
On 11 January 2010, a new board committee, the Finance Committee, was
established, comprising all four of the RTM’s independent directors.
The role of the new committee is to oversee the restructuring of
Rickmers Maritime’s liabilities and to resolve any conflicts or
potential conflicts of interest that may arise as a result thereof.
Mr Quah Ban Huat, Chief Financial Officer of RTM, said, “The formation
of the Finance Committee underscores our commitment to resolving our
financing issues and we are hopeful that with the establishment of this
board committee consisting of highly respected members, the negotiation
process will be accelerated. We would like to assure our unitholders
that we are committed to seeking a comprehensive solution that protects
the interests of the Trust and its unitholders.”
FLEET OPERATIONS
As at the end of FY2009, Rickmers Maritime’s operating fleet comprises
16 container vessels, of which 15 are chartered out on long-term fixed
rate-charters to global leading liner companies – CMA CGM, Italia
Marittima S.p.A. (part of the Evergreen Group), Mitsui O.S.K. Lines Ltd
and Hanjin Shipping Co., Ltd. (“Hanjin Shipping”).
Kaethe C. Rickmers, a 5,060 TEU containership, was re-delivered to the
Trust on 1 February 2010 and is proceeding for its first scheduled
dry-docking in Asia. RTM is actively marketing the vessel for future
employment.
Said Mr Hansen, “With the cooperation of our ship manager, we have
succeeded in providing our charterers with the highest level of
operating efficiency at 99.9% utilisation rate. We are also actively
assisting our charterers with their request to ultra slow-steam our
vessels. Not only does this help our charterers save a significant
amount of fuel cost, but has the added benefit of reducing carbon
emissions.”
Rickmers Maritime continued to maintain efficiency on the operations
front, with only 0.2 off-hire days in the fleet in the fourth quarter
and a total of 7.9 days for the year, thereby maximising charter
revenue for the Trust.
As discussions with the Trust’s creditors on its financial issues have
not been finalised, the Trust was not in the position to take delivery
of the remaining three 4,250 TEU vessels - Hanjin Milano, Hanjin
Duesseldorf and Hanjin Montevideo. The vessels were delivered to the
Rickmers Group and have commenced their respective charters with Hanjin
Shipping.
The delivery of these vessels and subsequent newbuildings is contingent
upon the Trust reaching a solution with its lending banks as well as
the Rickmers Group.
Outlook for 2010
Signs that the shipping industry is picking up have emerged in recent
months. Container volumes in most major trade lanes are continuing
their slow recovery, leading to a slight improvement in freight rates,
while the number of laid-up containerships has also stabilised. The
record-high level of ship demolition, delay and cancellation of
newbuilding contracts, combined with slow-steaming of ships, are also
expected to contribute positively to the recovery of the container
shipping segment. The consensus among industry
watchers is that the worst is over and that the container shipping industry is finally on the mend.
Concluded Mr Hansen, “We are cautiously optimistic about the positive
spillover effects on the container shipping industry as a result of the
recovery of the world economy. The first signs of sustainable recovery
are apparent in most segments of the container industry.
However, operating conditions in the near-term continue to be challenging and
counterparty risks remain high. Notwithstanding this and barring unforeseen
circumstances, our long-term charters will stand us in good stead in the year ahead.”
Source: Rickmers Maritime |
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