Mercator Lines posts unaudited financial results for the nine months ended Dec’ 2012
Mercator Lines (Singapore) Limited, a leading Indian-owned international dry bulk shipping company focusing on high growth markets such as India, Indonesia and China, today announced its unaudited financial results for the nine months ended Dec’ 2012 with revenue of USD 84.2 million, as compared to USD 109.3 million for the corresponding nine months period during the previous year.
Revenue for the nine months ended December 31, 2012 registered a decrease of 23% to USD 84.2 million as compared to USD 109.3 million for the corresponding nine months of FY 2012.
The decrease in revenue is mainly due to fall in spot rates and renewal of long term contracts at rates lower than previous rates. The dry bulk shipping market continues to remain tough, Baltic Panamax Index (BPI) saw a drop of 59% from 1738 at the closing of Q3 FY 2012 to 710 at the closing of Q3 FY 2013.
Loss for nine months ended December 31, 2012 was USD 72.7 million as against Profit of USD 6.8 million for nine months period ended December 31, 2011. Loss includes onetime impact of USD 58.0 million (comprising of compensation & provisions in relation to Chartered in Vessels amounting to USD 30.9 million and provision for loss on sale of MV Sri Prem Putli amounting to USD 23.0 million and other provisions of USD 4.1 million) out of which the non-cash loss is USD 38.7 million.
The Mercator Lines has proactively initiated a plan to lower its debt and liabilities and enhance its cash flow position. Planned sale of its vessel MV Sri Prem Putli will generate net proceeds of USD 44.4 million. The Mercator Lines has also entered into agreements for early termination of charters with the owners of two of its long term chartered in vessels. It is also negotiating change of terms for its third long term chartered in vessel. Compensation for these arrangements would be in cash and stocks. The proceeds from the sale of MV Sri Prem Putli will be partly used for paying down Mercator Lines’s debts and partly for payment of compensation & expenses relating to termination and change of terms of long term Chartered in Vessels.
The above would help the company not only to lower its debt levels but also enhance its cash flows. Basis the current market, the Mercator Lines would save around USD 25 million over the next two years.
Said Mr. Shalabh Mittal, Managing Director and CEO of Mercator, “We have been proactively working on de-risking the Company and raising liquidity. Proceeds from sale of MV Sri Prem Putli would help us reduce long term debt and liabilities. The termination and rearrangement of terms of chartered in vessels are beneficial for the company as it would help reduce company’s liabilities and significantly improve its cash flows. Our cost reduction efforts have also resulted in lower operating expenses. We will continue to explore ways of bolstering our operating and financial strengths. The above initiatives will leave us in a strong position to face the industry challenges and also take advantage of the market to explore growth opportunities”, concluded Mr. Mittal.
Mercator Lines’s main markets like India, Indonesia and China continue to see trade growth. India set a new record for imported Coal with more than 100 million MT imported in CY 2012 while Indonesia registered 8.2% growth in coal exports with 304 million MT of coal exports in CY 2012.
Mercator, which commenced operations in 2005, has established a market presence in the Indian coal transport market, specializing in the transportation of dry bulk commodities such as coal into India from Australia and Indonesia and iron ore from India to countries such as China.
Mercator’s positioning in the Indian markets helps maximize the capacity usage efficiencies by using its vessels on the triangular route of Indonesia – India – China. With exposure to the infrastructure sectors like Steel and Power of India and China, Mercator is well positioned to benefit from the strong growth of these countries.
Its ultimate parent company, Mercator Limited (“ML India”), has diversified business interests in Coal, Oil & Gas, Commodity Transportation and Dredging.
Mercator operates a fleet of sixteen dry bulk vessels, fourteen owned and two chartered-in, comprising of geared and gearless Panamaxes/Post Panamaxes/Kamsarmaxes and a Very Large Ore Carrier (VLOC) with an aggregate capacity of about 1.5 million dwt as on December 31, 2012. The average age of Mercator’s panamax fleet is about 8 years.
