Rate plunge will hurt results
Written by Writer on Friday, October 31st, 2008
SHIPPING
TTA : Rate plunge will hurt results
Thoresen Thai Agencies Plc (TTA), the country’s biggest dry bulk shipper, says a sharp drop in freight rates in the wake of the global credit crunch would hit its results in the next two years.
Shipping rates have plunged to a six-year low as cargoes are stranded by tighter trade finance and the global economic slowdown curbs demand for raw materials, said M.L. Chandchutha Chandratat, the TTA managing director.
”Traders are finding it hard to get letters of credit that guarantee payments for goods, while banks are wary of financing commodities and shipping transactions,” he said. ”This symptom has already been felt, and yes, this is going to hit us in 2009 and 2010.”
The Baltic Dry Index, the main gauge of shipping costs for commodities, fell 5.8% to 925 on Wednesday, down 92% from its peak in May at 11,793.
TTA earned 4.97 billion baht on revenues of 21.3 billion last year.
”2008 will be the year we break all our records in terms of both profit and sales,” M.L. Chandchutha said of full-year results due for release on Nov 28.
He did not give a specific forecast, but 11 analysts polled by Reuters Estimates expect TTA to post a 57% rise in 2008 net profit to 7.8 billion baht, on revenues of 30.2 billion, up 42%.
The company’s 10 billion baht in cash and its low debt would help it to weather the financial storm, he said.
To help offset the impact of a slowing world economy, the company planned to look at investments in energy and infrastructure, M.L. Chandchutha said.
TTA had no plans to cut capacity yet, ”but we won’t make any investments for at least three to six months”, he said.
TTA shares, down nearly 80% this year after peaking at 56 baht in May, closed yesterday on the Stock Exchange of Thailand at 10.70 baht, up 85 satang, in trade worth 490.93 million baht.
While some companies have taken advantage of the stock slump to buy back their shares, M.L. Chandchutha said he had no such plans.
”Buying back shares hasn’t really stopped foreign funds from selling,” he said. REUTERS
Bangkok Post
Friday October 31, 2008
