Rickmers – BT

Rickmers’ quarterly profit 54% above projection

Shipping business trust’s revenue exceeds estimate by 19% at US$13.5m

SHIPPING business trust Rickmers Maritime yesterday reported its first full quarter of results since its initial public offering (IPO) in May, with net profit coming in at US$8.4 million, 54 per cent higher than projected.

Revenue was 19 per cent higher than projected, at nearly US$13.5 million.

This was due to the early delivery by over a month of a sixth containership, which led to over $2 million more in revenues and $900,000 in unanticipated profits, said the trustee-manager’s chief financial officer Quah Ban Huat.

With a lower-than-anticipated cost of lubricant oil, the early delivery led to Rickmers recording cash flow from operating activities of almost $10.4 million, over a quarter more than expected, he said.

Mr Quah emphasised the importance of cash flow, saying that as a business trust, Rickmers pays its distributions out of this item.

The trust will be making a quarterly distribution of 2.14 US cents per unit, payable this month. This is in line with its projection at the time of its IPO, and works out to an annualised 8.56 US cents. At Rickmers’ closing share price of S$1.44 yesterday, this represents an annual yield of over 8.6 per cent.

Asked whether the stronger cash flow might lead Rickmers to increase its payout, Mr Quah said it ‘will evaluate the possibility of doing so only at the appropriate time’.

During the quarter, Rickmers announced the acquisition of 13 new containerships, which will be delivered through end-2010.

All come with accretive, long-term fixed rate time charters to three of the world’s most reputable liner companies, said chief executive Thomas Preben Hansen.

The 13 vessels include four containerships of 13,100 TEUs (twenty-foot equivalents) each, which will be among the world’s largest when constructed. They also include nine containerships of 4,250 TEUs each.

The charter periods are also staggered – with only one ship becoming available in the next seven years – so that there is less risk of several ships having their charters expire during a downturn in the market, said Mr Hansen.

Downturns tend to be ‘fairly short and sharp’ and may ‘hit on a few ships’ but would not impact the trust’s ability to pay its distributions, he said.

Rickmers intends to focus on containerships, especially large ones of above 10,000 TEUs in capacity, for the time being, Mr Hansen also said. The segment enjoys double-digit growth year-on-year, compared with the 2 or 3 per cent growth rates in the dry bulk and carrier segments, so it can absorb over-capacity very quickly, he said.