TTA Reported Strong Net Profits of Baht 530.3 Million for the Second Quarter of 2021 as Dry Bulk Market is Rising
Thoresen Thai Agencies Public Company Limited or TTA announced its financial results for the second quarter ended June 30, 2021.
The Company generated consolidated revenues of 5,125.8 million, increasing 49%QoQ and 74%YoY. Shipping, Offshore Service, Agrochemical, Food & Beverage, and Investment segments contributed 52%, 15%, 17%, 11%, and 5% to the consolidated revenues, respectively. Gross profits increased 80%QoQ and 191%YoY to Baht 1,417.3 million. EBITDA rose 105%QoQ and 1,179%YoY to Baht 1,013.0 million.
Total assets as of June 30, 2021 stood at Baht 32,401.0 million, which increased by 4% or Baht 1,371.7 million from the end of 2020, mainly due to an increase in property, plant, and equipment resulting from the acquisition of one second-hand vessel in January 2021. Cash under management, which combines cash, cash equivalents, and other current financial assets, remained high at Baht 7,539.3 million. The capital structure remained strong with a low net interest-bearing debt to total equity (net IBD/E) of 0.06 times at quarter-end.
The six-month period marks a strong financial performance on the significantly improved contribution from all key business segments, especially Shipping segment.
In 2Q/2021, Baltic Supramax Index (BSI) reached an average of 2,322 points, compared to an average of 1,512 points in 1Q/2021. TC rate of Supramax reached an 11-year high above US$ 30,000 per day in mid-June, resulting in an average market rate of US$ 25,538 per day in 2Q/2021. Thoresen Shipping achieved its best operating performance; its average time charter equivalent (TCE) rate was at US$ 18,330 per day with gains from both owned and chartered-in vessels. For Offshore Service segment, Mermaid Maritime continued the momentum; its order book reached its new record high at US$ 286 million at quarter-end, and its EBITDA became positive. In addition, Agrochemical segment by PMTA continued to be profitable from the growth in domestic fertilizer sales volume and higher selling price.
Excluding extraordinary losses of Baht 122.6 million, mainly from the allowance for impairment, normalized net profits to TTA was Baht 652.8 million, and net profits to TTA was Baht 530.3 million, improving 180%QoQ and 320%YoY in 2Q/2021.
Mr. Chalermchai Mahagitsiri, President and Chief Executive Officer, said: “The dry bulk market has been on a firm rebound since the beginning of 2021 and market participants expect the trend to continue in the upcoming quarter. Dry bulk trade volumes are currently projected to grow 4.6% in ton-miles while fleet expansion looks limited and is projected to slow to 3.3% in the deadweight ton (DWT). The surging demand for infrastructure-related commodities such as coal and iron ore is likely to help drive the dry bulk market rally into the third quarter, with freight levels and time charter earnings setting new records. The market also sees further steady improvements into 2022 with approximately 2% demand growth and 1.4% fleet growth. Thoresen Shipping is one of the global dry bulk shipping companies that continues to maintain its top performance on their Time Charter Earnings (TCE). For Offshore Service Segment, the potential for future decommissioning work is expected to continue over the next 1 0 years. Mermaid has seasoned Thai personnel with working experience in oil and gas operations and offshore facilities construction in the Gulf of Thailand that will meet demand from major oil & gas operators in Thailand and the surrounding region.
Key Strategic Business Segment Performance Shipping Segment:
Thoresen Shipping Group’s freight revenues in 2Q/2021 were reported at Baht 2,689.5 million, which increased 56%QoQ and 141%YoY, mainly due to the rising freight rate. In 2Q/2021, TCE rate rose 61%QoQ and 144%YoY to US$ 18,330 per day. It comprised owned fleet TCE rate of US$ 16,713 per day and gains from the chartered-in vessels of US$ 1,617 per day. Owned fleet TCE rate, mostly pricing at the spot rate, significantly grew with 100% utilization. The highest TCE rate was at US$ 37,748 per day. Vessel operating expenses (OPEX) remained low at US$ 4,168 per day, 7% lower than industry OPEX of US$ 4,503 per day. As a result, Gross profits increased to Baht 875.6 million and EBITDA improved 132%QoQ and 361%YoY to Baht 823.0 million. Thoresen Shipping delivered net profits to TTA of Baht 671.6 million in 2Q/2021, improving 227%QoQ and 1,358%YoY. At quarter-end, it owned 24 vessels (22 Supramaxes and 2 Ultramaxes) with an average size of 55,913 DWT and an average age of 13.2 years.
Offshore Service Segment:
Mermaid Maritime’s revenues in 2Q/2021 were recorded at Baht 760.9 million, which increased 34%QoQ and 49%YoY. The QoQ increase was due to higher vessel utilization and an increase in non-vessel revenues while the YoY increase was due to the better vessel day rate and an increase in non-vessel revenues despite lower vessel utilization. The performing vessel utilization in 2Q/21 increased QoQ from 60% to 67% but decreased YoY from 71%. Gross profits had been positive for the fourth consecutive quarter since the recovery in 3Q/2020 and improved significantly by 130%QoQ and 232%YoY to Baht 122.6 million. Cable laying projects have been in progress and given a good margin. EBITDA turned positive to Baht 13.3 million in 2Q/2021, compared to Baht (194.0) million in 2Q/2020.
In conclusion, Mermaid Maritime reported a net loss for the period of Baht 98.7 million and a net loss to TTA of Baht 58.6 million, improving 19%QoQ and 66%YoY in 2Q/2021. The order book reached a new record high at US$ 286 million at the end of 2Q/2021.
PM Thoresen Asia Holdings Public Company Limited or PMTA reported total revenues in 2Q/2021 at Baht 896.7 million, which increased 72%QoQ and 41%YoY due to higher domestic fertilizer sales volume and selling price. Total fertilizer sales volume in 2Q/2021 increased to 56.4 KTons. Domestic fertilizer sales volume reached a record high at 49.9 KTons, mainly due to increasing demand and effective inventory management, as well as seasonal factors. Export to countries in South East Asia like Thailand and Cambodia has continued while the export to Africa was limited by the shortage of containers and higher container freight rate; however, it started to recover in this quarter. As a result, export fertilizer sales volume increased 336%QoQ to 6.6 KTons.
Service income from factory area management increased QoQ and YoY to Baht 12.9 million in 2Q/2021, due to higher demand during this quarter.
In summary, PMTA reported net profits for the period of Baht 31.0 million and net profits to TTA of Baht 21.3 million, improving 106%QoQ and 249%YoY in 2Q/2021
Food & Beverage Segment:
Pizza Hut is operated as a 70%-owned subsidiary of TTA. As of 30 June 2021, there were 172 outlets nationwide.
Taco Bell, the leading American restaurant chain serving a variety of Mexican inspired food, is operated as a 70%-owned subsidiary of TTA. As of 30 June 2021, there were 10 outlets nationwide.
Investment Segments: focuses on water, and logistics sectors.
Asia Infrastructure Management (Thailand) Co., Ltd. (“AIM”), an 83.75%-owned subsidiary of TTA, is the water contractor/service company. AIM also owns a concession to sell tap water in Luang Prabang, Laos, through a 66.7%-owned subsidiary.
Source: Thoresen Thai Agencies PLC