SIEM SHIPPING INC 26 October 2015 - SIEM SHIPPING INC. (the 'Company'; OSE Symbol: SSI) announces its results for the nine-month period and quarter ended 30 September 2015, prepared in accordance with the International Financial Reporting Standards ('IFRS'), as discussed below.
Siem Shipping Inc. is an owner and operator of vessels in specialist shipping sectors. Operating in the specialised reefer industry as STAR Reefers, the Company is a leading global owner and operator of refrigerated vessels and directly controls 28 vessels with a total capacity of 16 million cbft.
In the first half of 2015, the Company entered the car carrier market as a tonnage provider by agreeing to construct two 7,000 CEU pure car and truck carriers ('PCTCs'; CEU means car- equivalent units) for delivery in the second half of 2017 at the Uljanik d.d., a shipbuilder based in Croatia.
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Net profit of USD2.5 million (Q3 2014 loss of: USD0.2 million)
EPS USD0.27 (USD-0.02)
- EBITDA of USD7.7 million (USD7.0 million)
Dunedin Star charter renewed for a further one year
- Four Star-Class vessels chartered to De Nadai
- Approx. 96% of fleet capacity is fixed for the balance of 2015
- Contract backlog: USD483 million (USD438 million)
Siem Shipping reported a net profit of USD2.5 million (Q3 2014: net loss USD-0.2 million). Earnings per share was USD0.27 per share (USD-0.02 per share).
Gross revenue was USD49.3 million (USD57.8 million) and available capacity decreased by 4% to 53.3 million cbft (55.6 million cbft). Net operating revenue after voyage expenses was USD39.7 million (USD39.4 million).
Ship operating and administrative expenses were USD14.2 million (USD15.8 million), with the decrease mainly due to redelivery of Regal Star in December 2014 and sales of Chile Star and Uruguay Star in January 2015. In December 2014, dry-dock amortisation expenses were reclassified from ship operating expenses to depreciation and amortisation expenses to reflect industry practice. Dry-docking costs are capitalised and amortised over the period until the next scheduled dry-docking, ranging from three to five years. For comparative purposes, the amortisation expenses recorded in the comparative figures for 2014 reflect the new classification.
Time charter and bareboat expenses were USD17.9 million (USD16.6 million). The increase is mainly due to the charter-in of additional tonnage.
EBITDA was USD7.7 million (USD7.0 million). Depreciation and amortisation was USD4.5 million (USD4.3 million). The increase in depreciation was mainly due to a higher depreciation base following the investment in the lengthening of the four C-Class vessels (Caribbean Star, Costa Rican Star, Cote D'Ivoirian Star and Colombian Star).
Interest expense was USD0.8 million (USD1.9 million). The reduction was due to a new credit facility with a lower interest rate from 30 September 2014.
Other financial items were USD0.1 million (USD0.1 million) of which the mark-to-market of 5-year interest swaps amounted to a gain of USD0.2 million (USD0.2 million).
The Company reported a net income of USD7.8 million (net income USD1.4 million). Earnings per share was USD0.85 (USD0.15).
Gross revenue was USD150.3 million (USD178.8 million). Net operating revenues after voyage expenses were USD120.9 million (USD114.9 million). The available capacity reduced by 3% to 157.6 million cbft (162.4 million cbft), the decrease was mainly due to redelivery of Regal Star in December 2014 and sales of Chile Star and Uruguay Star in January 2015.
Ship operating and administrative expenses were USD40.8 million (USD46.7 million), with the decrease mainly due to redelivery of Regal Star in December 2014 and sales of Chile Star and Uruguay Star in January 2015. In December 2014, dry-dock amortisation expenses were reclassified from ship operating expenses to depreciation and amortisation expenses to reflect industry practice. Dry-docking costs are capitalised and amortised over the period until the next scheduled dry-docking, ranging from three to five years. For comparative purposes, the amortisation expenses recorded in the comparative figures for 2014 reflect the new classification.
Time charter and bareboat charter expenses increased to USD57.0 million (USD49.2 million). The increase is mainly due to the charter-in of additional tonnage.
EBITDA was USD23.1 million (USD19.0 million). Depreciation and amortisation was USD13.2 million (USD12.2 million). The increase in depreciation was mainly due to a higher depreciation base following the lengthening of the four C-Class vessels.
Interest expense was USD2.3 million (USD4.5 million). The reduction was due to a new credit facility with a lower interest rate from 30 September 2014.
Other financial items were USD0.2 million (USD0.2 million), which included the mark-to- market of 5-year interest swaps gain of USD0.5 million (USD0.5 million).
Shareholders' equity was USD160.8 million at 30 September 2015 (31 December 2014: USD157.1 million) or USD17.63 per share (31 December 2014: USD16.28 per share). Cash flow from operating activities YTD 30 September 2015 was USD24.7 million (USD9.1 million). The cash position increased from USD37.5 million at year-end 2014 to USD43.0 million at 30 September 2015. During Q2 2015, the Company drew down the remaining available balance of the six-year USD100 million loan from ABN AMRO Bank and Credit Suisse Bank. The funds were used to partly finance the acquisition of Star First and Star Prima. The facility carries an interest rate of Libor plus a margin of 2.4%, an arrangement fee of 1% and a commitment fee of 1%. The net interest-bearing debt increased from USD64.2 million at year-end 2014 to USD76.9 million at 30 September 2015, after repayment of bank debt of USD15.4 million. The next scheduled repayment of bank debt of USD7.7 million in November 2015 was prepaid in July 2015. In addition to the liabilities on the balance sheet, the Company has significant long-term charter commitments (see note 7 to the accounts).
In Q3 2015, the average market spot rates were 40 cents per cubic foot per 30 days ('cents'), compared to 31 cents for the same period in 2014. With the majority of banana volumes now under contract and demand from Eastern Mediterranean markets well below historical norms due to political disturbances, spot market activity during the period was limited. Ecuadorian banana export volumes were seasonally reduced but several fixtures were concluded for spot banana fixtures from East Coast Central America, due to larger than normal seasonal production. Container lines continued to offer low rates due to surplus vessel capacity.
The traditional citrus trades are exhibiting diverse results as the weakness of the Ruble impacted demand for citrus from Argentina, severely affecting export volumes. The citrus crop in South Africa is reported to have increased by about 10%, with the increased volume shipped in containers to the Middle East and specialised reefers to Russia. The Moroccan season is expected to ship more produce than 2014. The increased volume is expected to be shipped in specialised reefers to the traditional Russian and North American markets.
In the YTD, only four ships from the global specialised reefer fleet (above 400,000 cbft) have been reported as scrapped. No vessels from the Company fleet were scrapped in the period.
Our in-house ship management company, Siem Ship Management managed 18 owned reefer vessels and two car carriers indirectly owned by Siem Industries Inc.
For the third quarter of 2015, there was one minor operational incident leading to off-hire. YTD unplanned off-hire due to technical reasons was 0.11% (2014: 0.7%). During the quarter, there were no major health, safety, environmental and quality (HSEQ) issues reported, except for one minor injury to a crew member aboard Andalucia Star requiring medical attention ashore.
Fleet Changes, Deployment and Contract BacklogThe project to lengthen the four C-Class vessels was completed in March 2014. The project took longer than anticipated due to delays caused by the shipyard. The yard has submitted contract variations on all four vessels for claims for more time spent on the projects than it had anticipated when it signed the contract. Siem Shipping has taken legal advice in this matter and is hopeful, following recent in-depth discussions, that an amicable settlement can be achieved. All four vessels are contracted-out on seven-year time charters.
In 2010, Siem Shipping entered into a contract with Alaska Reefer Management to charter out the Dunedin Star. This contract was renewed in 2012 and 2013 and has now been renewed again for another year. In addition, four Star-Class vessels have been chartered out to De Nadai Group; two vessels for a period of four years and two vessels for a period of three years with delivery in 2016 at profitable rates.
As of 30 September 2015, 96% of fleet capacity for the remainder of 2015 had been fixed. The contract backlog at 30 September 2015 was USD483 million (USD438 million).
OutlookThe container lines are continuing to use very aggressive pricing strategies to win market share in the reefer segment. The specialist reefer operators continue to fight back by highlighting the superior quality of the service they provide but the margins are being squeezed.
The forecasted El Niño climatic event is expected to change the banana supply mix in the coming months from Ecuador/Central America. Siem Shipping is well positioned to adapt to the change in demand whilst continuing to provide a first-class service.
The Company's reefer strategy is to maintain its position as a leading specialist reefer operator and to provide its customers with a high-quality service at competitive prices. Siem Shipping now controls a fleet of 28 vessels with a capacity of 16 million cbft. In the first half of 2015, the Company entered the car carrier market as a tonnage provider by agreeing to construct two 7,000 ceu pure car and truck carriers (PCTCs) for delivery in the second half of 2017 at the Uljanik d.d., a shipbuilder based in Croatia. The Company is also continuing to evaluate opportunities in other sectors of the shipping market.
23 October 2015
The Board of Directors of Siem Shipping Inc.
This release contains certain forward-looking statements regarding the intents, beliefs or current expectations. These forward-looking statements are based on information currently held. The Company assumes no obligation to update these statements. It is important to note that these forward- looking statements involve uncertainties about future performance. The Company's actual results may differ materially from these statements as a result of various important factors beyond the control of the Company.
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