For the year, I.M. Skaugen Group (IMS) reported a net pre-tax profit of USD22.2 million in 2007 (USD11.0 million in 2006). The result on an EBITDA basis was USD42 million in 2007 (USD34.7 million in 2006).
Norgas, our petrochemical gas carrier business, had a satisfactory performance, supported by continued global economic growth - especially in the emerging markets - as record high crude oil prices. Norgas' performance benefited from an increase in export volumes from the Middle East to both Europe and Asia to meet petrochemical cracker demands. Overall, for the year, there was a solid increase in freight volumes and lower idle time. Once final figures are collated, we anticipate the record for the year will show that we enjoyed double digit growth in 'ton-miles' for the services we perform.
Skaugen Marine Construction (SMC) is our Chinese-based shipbuilding activity and has responsibility for all aspects of our newbuilding programme - including managing our joint venture and alliance partnerships. During the year, SMC completed the construction of its first two vessels, both of them 3,200 cbm pressurized LPG Carriers. These vessels have been sold by SMC to third-party customers - along with a third ship of the same design, once completed in early 2008. Additionally, the first LPG/ethylene/VCM/organic chemical carrier - built on behalf of Norgas and named "Norgas Pan"- was successfully launched on 25 December, 2007.
During the year, SMC was affected by the pressure of high activity in the whole value chain in shipbuilding. Coupled with rapid growth in the global economy in general -and in China in particular - along with very strong demand for the construction of new vessels, this impacted our new building costs. Since the start of our new building programme we have, along with others, suffered considerable price increases in raw materials and specialised components. At the same time we have also encountered an unfavourable shift in exchange rates. These factors are not unique to us, as evidenced by the steep increase in prices for comparable activities, both on a global basis and in Asia in particular.
Despite these challenges, the work of SMC, in its first full year of operation, is a significant development towards the continued success of the company. Our innovative strategy of building tailored and specialized ships - both for our own Norgas fleet and to sell in the market - at costs below what others can offer, provides us with a financial and operational flexibility unavailable to other operators.
The performance of SPT, our Marine Transfer Operation, suffered due to challenging trading conditions across the year. During the first half of 2007, SPT had to hire-in additional shipping capacity - at high levels in a buoyant market - to meet customer contract obligations. The weak spot tanker market that evolved in the second half of the year, prior to the winter season, brought further difficult conditions for SPT, particularly in 4Q07 when it had some excess short-term tanker capacity that was difficult to employ in a profitable way.
In the second half of the year, the first four of SPT's six new Aframax tankers were delivered. Due to scheduling challenges in repatriating the vessels from Japan to USA only two became operational before the end of the year, while a further two will become operational in early January 2008. The remaining two ships will be delivered early in 2008. Going forward, the new vessel additions will allow SPT to reduce tanker costs and improve competitiveness, offering the opportunity to revert to profitability.
At the Annual General meeting on 3 March 2008, the Board will recommend a dividend payment equal to NOK1.75 per share, the same as was paid in 2007. This dividend represents approximately a three per cent direct yield on the share price of NOK56.00 at year-end.
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 SE (IMSK) - www.skaugen.com - is a Marine Transportation Service Company engaged in the hassle-free transportation of petrochemical gases and LPG, marine 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 (USA), Oslo and Stavanger (Norway), Singapore, Sunderland (UK) and 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 approximately 1,600 people and currently operates 38 vessels worldwide. The fleet comprises petrochemical gas and LPG carriers, Aframax tankers and lightering support vessels, barges and tugs.
IMSK has a comprehensive newbuilding programme in China for three 3,200 cbm LPG vessels; three purpose designed combination carriers with LPG/Ethylene/VCM and Organic chemicals carrying capability; up to ten advanced 10,000-12,000 cbm LNG/LPG/Ethylene gas carriers 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. Four of six new purpose-designed and built "Aframax"- sized tankers were delivered to SPT during 2007 on a long-term bareboat charter, with the remaining vessels due for delivery during spring 2008.