Tankship Owner Turns First Profit Since 2008

Latvian Shipping Company (LSC) owners of 19 medium-size tankships reports a profit in Q1 2013.

LSC and its affiliates made a profit of US$ 77,000 despite an impairment charge of US$ 1.7-million against the decrease of the fleet value. Though in absolute terms the profit is merely symbolic, it is nevertheless a sign of major progress; it is the first time since 2008 when the LSC Group reports a positive financial result. Just to compare – the LSC Group closed Q1 of 2012 with a loss of US$ 17.77-million.

Simon Blaydes, Chairman of LSC Management Board, explains: "Latvian Shipping Company is prudently optimistic about the prospects of the petroleum product tanker market, because charter rates have been increasing progressively. The closing down of oil refineries in OECD countries, resulting in increasing demand for longer voyages, as well as the emergence of new product export markets in the USA can also be mentioned as positive trends. At the same time the global economic environment continues to be in a fragile equilibrium. Growing demand in product haul, without any rapid increase in orders for new ships, will remain the key driver to future success for Latvian Shipping Company.”

LSC fleet net voyage result in the first quarter of 2013 was USD 22.22 million, which is a small increase over the first quarter of 2012 (USD 21.58 million). Net voyage result is the difference between voyage income and voyage cost, and it represents total income irrespective whether the fleet is engaged on voyage or time charters.

Also further cuts to administrative expenses by 36% to USD 2.06 million in Q1 of 2013, down from USD 3.24 million in Q1 of 2012, have had a positive effect on the LSC Group financial performance.

In the first quarter, the LSC Group has been able to improve its cash flow: as at 31 March, it had cash and short-term deposits of USD 29.26 million, which is by USD 3.13 million more than at the beginning of the year. Furthermore, LSC has reached an agreement with its major shareholder joint stock company "Ventspils nafta” that, if needs be, the latter would continue financing the LSC Group, so that the cash reserves of the LSC Group at any time do not fall below the USD 17 million threshold set by the bank syndicates.