GE Shipping posts 16 per cent Q4 loss; sees 'dark tunnel' ahead

09 May 2009

Great Eastern Shipping Co Ltd showed a 16 per cent drop in quarterly net profit on lower earnings from ships and loss on sale of assets, and has predicted bleak quarters ahead. "We are looking at a pretty dark tunnel," managing director Bharat Sheth said at a conference call.

The company's net profit for the year ended March 2009 rose marginally by 2 per cent to Rs1,384.82 crore from Rs1,356.81 crore a year ago.

High tanker fleet growth and lower oil prices would put pressure on rates and utilisation levels, while low refining margins and "depressed demand" for products will keep a lid on product tanker rates. "The immediate outlook is very, very weak. Rates would be materially lower in the spot market - both tanker and dry bulk," Sheth said.

A drop in demand for steel, iron ore and coking coal transportation and high fleet growth would be a damper for dry bulk carriers, the firm said in an earnings release to the stock exchanges.

"It's an unprecedented level of volatility we are seeing. 2009 is almost going to be a washout in terms of recovery. 2010 – it's very difficult to know what will happen," Sheth said.

GE Shipping posted a net profit of Rs250 crore, compared with Rs299 crore a year ago on a 32 per cent fall in total income to Rs534 crore. It had a loss on sale of ships worth Rs26.5 lakh as some vessels were sold at a price lower than its book value; and another Rs70 lakh on account of asset impairment, chief executive officer G Shivkumar said.