LATVIAN SHIPPING COMPANY SUBSTANTIALLY MODERNISES FLEET
The public stock company Latvijas kuģniecība (Latvian Shipping Company -LASACO)
has issued a consolidated and unaudited report about 2009, showing that the
strategy of modernising operations and the fleet has allowed the company to
reduce the average age of its ships from 17.5 to 8.2 years at the end of last
year. This has allowed the concern to maintain stable positions among the
largest worldwide companies in the medium-sized tanker segment. In terms of oil
product transport, it is still among the leading companies in that sector in
Northern Europe. During the reporting period and despite the distinctly tense
situation in shipping markets, the Latvian Shipping Company concern managed to
ensure positive results for the shipping operations - USD 9.3 million. Because
of the modernisation of the fleet and the financing of various investments,
however, the concern finished the reporting period with a loss of USD 20.2
million.
“During the course of 2009, the Latvian Shipping Company continued a consistent
programme of change at the company, seeking to ensure that the company is a
flexible participant in the global logistics market, complete with effective
governance, a modern fleet, considered investments and targeted marketing. A
global economic crisis often is the best time for corporate changes. As the
economic situation recovers, there will be new market opportunities for those
players who have been able to change,” says Latvian Shipping Company council
chairman Māris Gailis.
Intensive changes have allowed the Latvian Shipping Company to reduce the
average age of its ships from 17.5 years to 8.2 years over the five years
leading up to the end of the reporting period. Six old ships were scrapped
last year. Over the next several years, these will be replaced with four new
tankers that are to be received in 2011 and 2012.
During the reporting period, the company reduced administrative costs by 46% --
to USD 18.7 million last year, as opposed to USD 34.6 million in 2008.
Operating costs for ships declined by USD 43.3 million (USD 82.8 million in the
reporting period and USD 126.1 million a year before). Financial costs in the
shipping segment declined by USD 6.7 million. The company's overall
liabilities have declined by USD 56 million or 9% since the beginning of 2009,
and the liabilities at this time are equal to 51% of the concern's assets.
“These are fundamentally important and successful steps toward ensuring in the
long term that as the economic crisis comes to an end, the Latvian Shipping
Company will be able to demonstrate a new level of energy in winning ever more
powerful positions in the market for medium-sized tankers. As economic growth
recovers, we will have the newest fleet, the most effective governance system,
and a very promising structure of assets,” says Māris Gailis.
The global recession inevitably led to a drop in shipping revenue - down by 22%
or USD 55.9 million during the reporting period in comparison to 2008. Low
shipping rates and a slowdown in the global shipping business have had a
fundamental influence on the operating revenue of ships - down by USD 26
million (41%) in the reporting period than in the previous year. Because of
this, the modernisation of the fleet, and the various investments that were
made, the Latvian Shipping Company ended the reporting period with a loss of
USD 20.2 million. The annual report has not been audited yet, however, and
work will continue to see whether the assessed value of the company's assets
should be higher or lower in comparison to the previous year's indicators.
2009 was marked by a particular slowdown in the market for ships charters, and
rates in this area collapsed to the lowest level in the last five years.
Logically, this affected the operating indicators of the Latvian Shipping
Company fleet. Far-sighted policies and effective reductions in ship
maintenance and administrative costs, however, allowed the concern to ensure
positive operations during the reporting period, with profits from ship
operations reaching a level of USD 9.3 million.
The value of the Latvian Shipping Company's equity at the end of the reporting
period was 524.5 million, or 49% of all assets. The total value of the
company's assets at the end of 2009 was USD 1.0767 billion. The Latvian
Shipping Company's 12-month ROE indicator was 0% in 2009, and losses per share
amounted to USD 0.10.
ADDITIONAL INFORMATION:
At the end of 2009, the Latvian Shipping Company had a fleet of 28 tankers.
Older ships were sold off in order to increase the fleet's competitiveness in
the international market for shipping. Two gas tankers were also sold during
the reporting period.
The modernisation of the fleet has ensured that the Latvian Shipping Company
has a modern and competitive tanker fleet with a total deadweight of 1.15
million tonnes. The tankers were mostly used during the reporting period to
transport light and heavy oil products in the Baltic, Northern European, Black
Sea, Mediterranean Sea, Transatlantic, Far East and Middle East markets.
For more information:
Marita Ozoliņa-Tumanovska, PR manager
Telephone +371-6702-0120, 2928-7169
marita.ozolina@lscgroup.lv
