New York-based cargo shipper Genco Shipping & Trading Ltd. (GNK), Wednesday, posted a lower profit for the third quarter, due to higher vessel operating expenses, higher depreciation and amortization expenses and lower time charter equivalent rates. However, Genco's earnings per share beat analysts' estimates.
Third-quarter net income decreased to $34.3 million or $1.09 per share from $63.0 million or $1.99 per share a year ago, the company said. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share. Analysts' estimates typically exclude special items.
Genco Shipping & Trading's revenues decreased 13.7% to $92.95 million compared with $107.56 million reported in the same quarter last year, due to lower charter rates. Ten Wall Street analysts expected revenues of $91.38 million for the third quarter.
President Robert Gerald Buchanan commenting said, "Our strong performance for the third quarter highlights management's success in locking away a large portion of our fleet on long-term time charters with a diverse group of leading multi-national companies. Currently, we have approximately 75% of our fleet's available days secured on contracts for the remainder of 2009 and 45% in 2010."
Genco said third-quarter total operating expenses increased to $42.7 million from $36.9 million for the comparable period in 2008, due to higher vessel operating expenses, management fees and depreciation and amortization related to the operation of a larger fleet.
Vessel operating expenses for the quarter increased to $14.77 million from $11.51 million last year, due to deployment of a larger fleet, higher crewing expenses, as well as the operation of more Capesize vessels for the recent quarter.
Daily vessel operating expenses grew to $4,878 per vessel per day from $4,187 for the same quarter last year.
Depreciation and amortization expenses increased to $22.3 million from $18.8 million, as a result of the growth of its fleet, Genco reasoned.
Third-quarter average daily time charter equivalent, or TCE, rates obtained by the Genco's fleet decreased 21.9% to $30,743 per day compared with $39,349 in 2008, resulting from lower charter rates achieved in the third quarter of 2009 versus the third quarter of 2008 for five of the Panamax vessels, six of the Supramax and Handymax vessels, and five of the Handysize vessels in our current fleet, Genco said.
Genco further attributed lower TCE rates for the third quarter of 2009 to the comparatively lower revenue from the profit-sharing agreements on two of its Capesize vessels, which was slightly offset by higher revenues on one of its Handymax vessels.
Genco said that during the quarter it took deliveries of the Genco Commodus and Genco Maximus. The company said it delivered Genco Commodus vessel to Morgan Stanley Capital Group Inc. for the commencement of a 23-to-25 month time charter at a rate of $36,000 per day, and Genco Maximus was delivered to Cargill International S.A. for the commencement of a 3-to-5.5 month time charter at a rate of $31,750 per day. Genco also said that it signed short-term time charter agreements for three Panamax vessels, two Supramax vessels and two Handymax vessels.
General and administrative expenses decreased slightly to $3.8 million from $4.1 million due to a decrease in costs associated with employee non-cash compensation, and other administrative costs.
For the nine-month period, net income decreased to $113.1 million or $3.60 earnings per share from $197.9 million or $6.56 earnings per share in 2008.
Genco said year-ago net income included a $26.2 million gain from the sale of the Genco Trader, $7.0 million of income received from its investment in stock of Jinhui Shipping and Transportation Limited, and a loss from derivative instruments of $2.0 million.
Nine-month revenues decreased to $283.3 million from $303.8 million in 2008.
Thursday, GNK closed trading down 5.30% at $19.67 on the NYSE.
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