TMM Reports Results
Jose F. Serrano, chairman and chief executive officer of Grupo TMM, said, "Despite weak global economic conditions, in the third quarter of 2008 TMM reported a revenue increase of 24.1 percent, net income of $14m and earnings per share of $.25. The Maritime division continues to produce solid results, confirming our strategy to grow revenues by acquiring vessels. With the acquisition of new vessels in 2008 and 2009, TMM will manage a significantly larger owned fleet than in the past several years. The increase in the number of owned vessels is a direct result of the completed funding of our peso denominated 20-year Trust Certificates Program, which is non-recourse to the Company, and our commitment to capitalize on the growing demands for oil distribution and exploration in . Our strategy is to pursue sustainable long-term growth and gradually expand our revenue and profit-generation capabilities.
"In these uncertain economic times, it is easy to focus on negative reports about the global credit crisis that dominates the headlines. However, TMM is not involved in any speculative derivative instruments, and our only outstanding hedge is on the Company's Mexican Trust Certificates Program, which has a cap on the TIIE rate, or 's Interbank Equilibrium Interest Rate, of 9.25 percent for three years. Moreover, with only 18 percent of our debt denominated in U.S. Dollars, the strengthening of the U.S. dollar versus the peso in the third quarter resulted in an exchange gain of $32m for the quarter and of $21.7m for the nine months of 2008.”
"At the offshore segment, three new vessels will start working under two- and three-year contracts with Pemex during the fourth quarter. We expect to add three vessels in the first quarter of 2009 and five throughout the remainder of 2009. Of these five vessels, three are already fixed with five-year contracts with Pemex and other clients, starting during the second and third quarters of 2009. With the addition of these vessels, TMM will manage a fleet comprised of 53 vessels, solidifying TMM as the leading Mexican maritime company."
Serrano added, "TMM's long standing strategy of having the majority of its fleet employed under medium- to long-term contracts has allowed the Company's Maritime business to continue to provide consistent returns. By continuing to focus on linking vessels to profitable contracts, we will lock in our maritime related revenues and cash flows to service our peso denominated debt for the remainder of 2008 and following years.
"Moreover, our offshore and product tanker vessels currently under contract have no exposure to fluctuating fuel prices. While our parcel tankers do have exposure, we have put in place a surcharge clause with several of our clients, which partially offsets fuel price increases. All of our current Maritime fleet is employed, and approximately 94 percent of these revenues are generated in U.S. dollars.
"While revenues were strong in the third quarter, transportation income at the Maritime division was impacted by delays from shipyards in delivering two offshore vessels, which will start contributing revenue and profit in the fourth quarter, by increased costs related to higher crew costs associated with the Company's continuing efforts to retain qualified crews, and by higher fuel expenses in parcel tankers and product tankers working in the spot market. These cost increases have also affected the shipping industry worldwide."
In the third quarter of 2008, consolidated revenues increased 24.1 percent to $95.4m, compared to $76.9m in the same period of 2007. In the nine-month period of 2008, consolidated revenues improved 25.1 percent to $273.8m compared to $218.8m in the 2007 period.
At Maritime, increased revenues in both periods were mainly due to higher average daily rates at the offshore segment and to additional offshore and product tankers in operation.
In the third quarter of 2008, Port revenues increased 14.3 percent due to improved revenues at , resulting from increased cruise ship calls and from higher volumes at the auto handling business. In the nine-month period of 2008, Port revenues decreased 4.7 percent attributable to lower volumes at shipping agencies. Notwithstanding, the Company believes the Port division will meet its 2008 EBITDA goal.