CP Ships Limited announced an unaudited first quarter 2002 operating loss of $6 million, down from an operating profit of $31 million in the first quarter 2001 and $35 million before exceptional credits in fourth quarter 2001. Net loss was $11 million compared to net income of $25 million in the same period in 2001. Loss per share was 14 cents compared with basic earnings per share of 32 cents in the same quarter last year.
In the seasonally weaker first quarter, volume at 436,000 teu was flat compared with the same period last year. Average freight rates were down 7% from fourth quarter 2001 and 13% lower than first quarter 2001. EBITDA was $14 million and cash flow from operations before restructuring costs was nil in the quarter.
Market conditions deteriorated in most trade lanes due to the effect of slower global container trade growth and significant additions to industry capacity. However, despite weaker freight rates CP Ships achieved an operating profit in March with seasonally stronger volume than in January and February and lower operating costs.
The previously announced 2002 annualized cost reduction target of $100 million remains on course with savings already achieved from operational cost cutting initiatives and organizational changes. As part of this, during the quarter, CP Ships renewed charters for 13 ships at significantly lower rates which will generate savings of nearly $25 million this year.
The ship replacement program is on track with the first newbuilding, of 3,200 teu, scheduled for deployment in June. A further nine new ships, one second-hand ship, and six long-term charters will be deployed by the middle of 2003 and based on current fleet size projections will increase the owned and long-term committed fleet to about 75% by capacity of the total. Fleet size on 31st March 2002 was 78 ships.
Liquidity and Capital Resources
Cash flow from operations before restructuring and spin-off payments for the first quarter was nil compared with cash generated of $38 million in the same period 2001 due mainly to the change from profit to loss.
Expenditure on capital assets in the first quarter was $16 million including $2 million on stage payments under shipbuilding contracts. In first quarter 2001, expenditure on capital assets was $109 million including $89 million for ships.
Long term debt of $226 million at 31st March 2002 remained largely unchanged from 31st December 2001. Net debt at 31st March 2002 was $134 million.
During the first quarter, CP Ships received commitment for the remaining $100 million of a $350 million secured five-year revolving credit facility announced in December 2001. The facility, which is subject to satisfaction of normal drawdown conditions, will be used primarily to finance the previously announced $800 million ship replacement program. It is additional to the $175 million secured four-year revolving credit facility of which $160 million was drawn at 31st March 2002. CP Ships is currently reviewing its long-term capital structure and future financing requirements.