CP Ships Reports 2Q Results

CP Ships Limited has announced an unaudited operating income for second quarter 2003 of $40 million, nearly double the $21 million operating profit in second quarter 2002 and a $42 million improvement from the $2 million operating loss before exceptional items of $10 million in first quarter 2003. Basic earnings per share was $0.32 compared with $0.20 in second quarter 2002 and basic loss per share before exceptional items of $0.12 in first quarter 2003. Net income was $29 million compared to $16 million in the same period 2002 and a net loss of $11 million before exceptional items in the first quarter 2003. Volume at 558,000 teu was a quarterly record, up 12% from second quarter last year. This reflected the inclusion of Italia Line 5%, the elimination of Asia-Europe services, which were discontinued at the very beginning of the quarter (6%) and underlying growth of 13%. Average freight rate on a comparable basis increased 7% from second quarter 2002 and 5% from first quarter 2003. EBITDA was $69 million and cash from operations before payments related to exceptional items $23 million in the quarter. Operations returned to normal after a difficult first quarter. The weaker US dollar continued to adversely affect costs despite hedging gains. Fuel price was down from first quarter, but higher than last year. Operating income before exceptional items for the first half 2003 was $38 million compared with $15 million in the same period last year. Stronger volume up 15%, higher freight rates up 5%, and lower ship network costs other than fuel were partly offset by the adverse effect of the weaker US dollar and higher fuel price. Net income after exceptional items was $8 million compared with $5 million. During the quarter, CP Ships took delivery of Canmar Venture, a new 4100 teu ice-strengthened ship and two long-term chartered 4100 teu ships under the company's $800 million ship replacement program. In July the remaining two ice-strengthened ships, one new and one used, were delivered, thereby completing the current ship replacement program. With completion of the current program, the proportion of owned and long-term chartered ships has increased to 63% of total capacity. As a result of service expansion, the acquisition of Italia Line and future trade growth prospects we are actively considering the addition of further owned and long-term committed ships to reduce our reliance on short and medium-term charters. The ship fleet was 86 ships on 30th June, unchanged from 31st March.