The I.M. Skaugen Group (IMSK) today announces positive third quarter results
The pre-tax profit was USD12.8 million for the 3Q07 compared to USD2.9 million for the 3Q06. The result of the 3Q07 on an EBITDA basis was USD18.6 million compared to USD8.8 million for the 3Q06 and USD8.2 million in 2Q07. Net pre-tax profit at the end of 3Q07 is USD21.3 million vs USD10.9 million at full year 2006.
I.M. Skaugen (IMS) is engaged in three business units; through Norgas, Skaugen Marine Construction (SMC) and Skaugen PetroTrans (SPT). Norgas comprises the group's gas transportation activities, SMC is responsible for the new ship building activities in China. SPT is involved in ship-to-ship transfer of crude oil and LNG.
Norgas had a satisfactory performance for the 3Q07, benefiting from the continuing momentum of the global markets for petrochemical gases with acceptable returns. High utilization of the fleet resulting in acceptable overall earnings for the fleet. This despite higher operational costs in general; increasing our "vessel break-even cost levels" resulted in the best quarter ever for Norgas. It is expected that the volumes to be transported, and thus high utilization, will remain strong through the final quarter of the year.
Skaugen Marine Construction (SMC), IMS's business unit responsible for all aspects of the company's newbuilding programmes. The first vessel completed as part of this program, the 3,200 CBM LPG carrier "Mei Wen Ti", was delivered to its buyers in 3Q07 and IMS took delivery of the second 3,200 LPG ship, "Qin Shi Huang" in 3Q07. The sale resulted in a gain of USD5.3 million for SMC. These vessels built to highest quality at expected cost, by SMC and with the cooperation of our Chinese Joint Venture partners. The cost of construction of these gas carriers are significantly below of comparable industry prices. We have experienced an increase in the construction costs of the SMC vessels compared to plan due to a substantial increase of raw materials (basic metal prices) and specially stainless steel prices in addition to higher cost for ship components. Our newbuilding program enables us however to renew and expand our fleet, with vessels that will offer special capabilities and added flexibility, at attractive price levels.
Skaugen PetroTrans (SPT) experienced a quarter with challenging trading conditions. High chartering-in cost of tankers, to cover customer contracts, have continued to impact the business so far this year and this was in 3Q07 compounded by a reduction in volumes to be handled on behalf of our customers through much of third quarter. The short term excess tanker capacity we had could not be utilized in the low returning spot markets at satisfactory rates. The excess capacity resulted from lower volumes arising from unplanned maintenance activities at offloading centres and a drawing down of US oil stocks. On the positive side, the latest Aframax tanker was delivered to SPT - bringing to three the number of new buildings now in the fleet - and this will significantly benefit future weighted average vessel costs. With rates still holding firm for the time charter market that company's performance looks set to improve in the medium - to long term.
New initiatives this quarter
Norwegian utility provider Lyse Gass and I.M. Skaugen have joined forces to create a unique LNG "small scale" supply chain for the Nordic markets. It is expected to come on-stream in 2010, creating the North European market leader in LNG. The partners will jointly establish and own Nordic LNG AS that will be the company responsible for the logistic and sales of the LNG made by the liquefaction plant.
A new 50/50 joint venture with GATX Corporation has been created. This new joint venture will assume the ownership of the first four 10,000 cbm sized Multigas carriers.
IMS also announced an order for four 12.000cbm sized "Multigas" carriers that are capable of LNG transportation in addition to the petchem gases we normally carry. Two of these new larger ships have been confirmed and two will be reconfirmed by end 2007.
Board of Directors
If you have any questions, please contact:
Bente Flø, Chief Financial Officer, on telephone +47 23 12 03 30/+47 91 64 56 08 or by e-mail: bente.flo@skaugen.com. This press release is also available on the Internet at our website: http://www.skaugen.com.
Listed on the Oslo Stock Exchange, I.M. Skaugen ASA (IMSK) - www.skaugen.com - is a Marine Transportation Service Company engaged in the hassle free transportation of petrochemical gases and LPG, ship-to-ship transfer of crude oil and LNG, as well as the design and construction of smaller and specialized high quality marine vessels.
IMSK is a fully integrated shipping company that designs, builds, owns, mans and manages our own ships. IMSK customers are major international companies in the oil and petrochemical industry, whom we serve worldwide from our operations in Dubai (UAE), Freeport and Houston (Texas), Oslo (Norway), Singapore Sunderland (UK), Nanjing, Shanghai, Taizhou, Zhangjiagang and Wuhan (China). IMSK operates recruitment and training programmes in St. Petersburg (Russia) and Wuhan (China) for the crewing of vessels.
IMSK employs approx. 1,500 people and currently operates 44 vessels worldwide. The fleet comprises petrochemical gas and LPG carriers, Aframax tankers, vessels and barges for the transportation of gases on the Yangtze River (China) and a small number of workboats for Skaugen PetroTrans (SPT).
IMSK has a comprehensive newbuilding project in China where it has one LPG vessels of three 3,200 cbm; three purpose designed combination carriers with LPG/Ethylene/VCM and Organic chemicals carrying capability and up to ten advanced 10,000-12,000 cbm LNG/LPG/Ethylene gas carriers are on order for Norgas for delivery from beginning 2007 and onwards. IMSK has invested in infrastructure with both a shipyard and a cargo plant maker in China to ensure innovative and flexible vessels at low cost. Six new, purpose designed and built "Aframax sized tankers", are on order for delivery to SPT on a long term Bareboat charter and for delivery from May 2007 until spring 2008.