Rickmers – BT

Rickmers Q1 earnings beat forecast by 54%

Unitholders okay acquisition of another contracted fleet of 13 ships

RICKMERS Maritime seems to be riding a huge swell forward as it yesterday announced another set of good results for the first quarter.

The shipping business trust posted a first-quarter revenue of US$22.33 million, 14 per cent higher than projected, while net profit came in at US$8.39 million, beating its forecast by 54 per cent. This is the fourth successive quarter that it has outperformed forecasts since its listing.

Rickmers attributed the good performance for the three months to March 31 to early delivery of newbuildings, lower cost of lubricant oil and smooth operation of the fleet. The trust was registered at the end of March last year and listed in May that same year.

With healthy cash flow from operating activities of US$16.93 million for the first quarter, Rickmers is able to keep its distribution policy of making regular quarterly distributions of 2.14 US cents per unit for this quarter. Total distribution comes up to US$9.07 million.

‘We are extremely happy to have exceeded projections for yet another quarter and believe that this further testifies to the hallmark of our business – its resilience and stability. In terms of strategy, we will continue to make accretive acquisitions and strategically manage our fleet in order to significantly grow our earnings,’ said the CEO of trustee-manager Rickmers Trust Management (RTM), Thomas Preben Hansen.

There is even more good news in store. Unitholders yesterday also approved the acquisition of an additional contracted fleet of 13 ships.

This will enable Rickmers to increase distributions by 5 per cent from 2.14 US cents to 2.25 US cents in the second quarter. The payout will be made in the third quarter and on an annualised basis unitholders will get a distribution payout of nine US cents.

Funding for the new vessels will comprise a combination of debt, equity and available cash reserves, RTM said.

The trust has adequate debt financing in place to fund at least the first six of the new vessels without raising any equity, and will be able to fund about 75 per cent of the US$1.35 billion purchase price with debt, if necessary.

Rickmers also recently secured US$627.5 million in new credit facilities. In addition, unitholders also approved a mandate allowing the trust to raise up to US$650 million of equity, representing about 50 per cent of the purchase price of the new vessels.

However, taking into account Rickmers Maritime’s adequate debt financing and excess cash flow from operations, the new equity requirement could amount to less than US$300 million.

Thus, the trust may consider a relatively small equity raising next year, with the majority of new equity to be issued for the acquisition taking place only in 2010 when the four largest vessels are due to be delivered, RTM said.