CP Ships Reports 4Q Results

CP Ships Limited today announced unaudited fourth quarter 2003 operating income of US $49 million, up from $34 million before exceptional items in fourth quarter 2002 and up from $44 million in third quarter 2003. Basic earnings per share was $0.46 compared with 2002's $0.23 before exceptional items and third quarter's $0.37. Net income available to common shareholders was $41 million, compared to $23 million in fourth quarter 2002. For 2003 overall, operating income before exceptional items was $131 million compared with $83 million in 2002. Basic earnings per share before exceptional items was $1.02 compared with $0.59. Return on average capital employed at 7.3% was up from 5.7% in 2002. Net income available to common shareholders was $82 million compared to $52 million in 2002. "With record operating income in the fourth quarter and up nearly 60% for the full year, and record volume and sales revenue for both the quarter and the year, we consider these to be outstanding results," commented Ray Miles, CEO of CP Ships. Volume at 569,000 teu was up 3% from fourth quarter 2002 and was the strongest quarterly volume ever. Average freight rates were 1% down from third quarter 2003 but 8% higher than fourth quarter 2002. EBITDA at $82 million was up from $64 million in fourth quarter 2002 and $9 million higher than third quarter 2003. For the full year, record container carryings at 2.2 million teu were 9% higher than 2002 while average freight rates were up 7% reflecting improved market conditions in most trade lanes. Operating costs for both fourth quarter and full year increased versus the same periods in 2002. Administrative costs were also higher including a restructuring charge of $4 million in fourth quarter 2003 versus $1 million in fourth quarter 2002. Cost per teu for the year overall was up by 6% due to three main factors. Firstly, the estimated net effect of the weaker US$, before hedging, was adverse $15 million for the quarter and $56 million for the year overall. Secondly, fuel costs were flat in the fourth quarter versus the same period in 2002, but for the year were up $56 million, of which $32 million was higher prices. Thirdly, renewed charters for 26 ships nearly all at more expensive rates during 2003 had an estimated net adverse impact on operating income of $7 million in the fourth quarter and $17 million for the full year. The annualized effect of these renewals is $34 million. A similar number of charters are expected to be renewed in 2004, for which the cost impact depends on charter market rates at the time and future configuration of ship networks. The 2003 cost reduction program delivered over $100 million of annualized savings, of which about $75 million contributed to the 2003 result, exceeding previously announced targets and partly offsetting the cost increases. The ship fleet decreased from 88 on 30th September to 80 ships on 31st December due mainly to restructuring services and phasing out ships.