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Bulk Shipper’s Profit Falls On Lower Rates

Bulk shipper Wisdom Marine Lines Co yesterday said that its pretax profit last month declined 4 percent from a month earlier to NT$991 million (US$35.75 million), as freight rates for small and mid-sized vessels dropped, but expressed optimism about the rate outlook for this month.

The fall affected the shipper, as more than half of its fleet are small and mid-sized vessels. Wisdom has 17 small handysize vessels and 52 handysize vessels among its fleet of 134 ships, company data showed yesterday.

The Baltic Handysize index, which tracks the prices of transporting raw materials via such vessels, slid below 1,600 points late last month, compared with a peak of more than 2,000 points in October.

Meanwhile, the Baltic Dry Index, which tracks the shipping rates of all types of ships, dropped below 3,000 points last month, from a peak of more than 5,000 points in October, mainly due to lower demand for commodities in China and improved traffic at China’s ports.

Wisdom said in a statement that the rates for small and mid-sized vessels retreated last month, as the market became more “conservative,” but continued demand for raw materials transport should support a rate rebound this month.

The shipper, whose revenue posted new records for seven months in a row until October, saw its revenue fall 2.4 percent month-on-month to NT$2.03 billion last month.

The company attributed the declilne to lower rates and fewer days of operation.

Pretax earnings per share also slid from NT$1.38 in October to NT$1.33 last month, company data showed.

However, on an annual basis, the shipper’s revenue and pretax profit last month advanced 92 percent and 12 times respectively, due to a low comparison base last year, the data showed.

For the first 11 months of this year, Wisdom’s revenue reached NT$17.1 billion, up 58 percent from a year earlier, while its pretax profit totaled NT$7.16 billion, compared with net losses of NT$171 million a year earlier, company data showed.

The bulk shipper holds an upbeat outlook for next year, saying that stricter regulation of vessels’ energy efficiency would be to Wisdom’s advantage, as the company has more efficient vessels than other shippers, it said in the statement.

The new rules are to take effect next year and are expected to affect about 80 percent of all vessels in the market, it added.
Source: Taipei Times

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