Rickmers – BT

Rickmers’ Q2 DPU up 5%; net profit soars

RICKMERS Maritime declared a distribution per unit (DPU) of 0.6 US cent for its second quarter ended June 30, 2011 yesterday, up 5 per cent from its DPU of 0.57 US cent in Q2 2010.

Cash flow available for distribution before payment to debt capital providers stood at US$26.5 million for the quarter, 4 per cent lower year on year. For the first six months of the year, the figure stood at US$51.4 million, a dip of 6 per cent from the corresponding period a year before.

After accounting for payment to the trust’s debt capital providers, US$3.7 million was available for distribution, 70 per cent lower than US$12.2 million in Q2 last year.

For H1 2011, cash available for distribution after paying off the trust’s debt capital providers was US$5.6 million, 80 per cent lower from US$27.5 million the year before.

Revenue for the quarter grew 3 per cent to US$37.6 million, driven by a better net charter rate of US$23,888 per day which the trust had secured for the Kaethe C Rickmers in late March, up from US$8,288 a day in Q2 last year.

The charter lease on the Kaethe C Rickmers expires in March next year.

For the first half of the year, revenue was flat, at US$73.4 million.

The trust’s quarterly net profit surged to US$8.6 million from US$610,000 the year before, driven by a writeback of US$2.9 million on vessel impairment because of the Kaethe C Rickmers.

The trust’s bottom line also fared better relative to 2010 because it had incurred a one-time loan restructuring of US$5.4 million in the second quarter of last year.

On a half-year basis, net profit for H1 2011 was US$17.9 million – almost triple that of H1 2010’s net profit of US$6 million.

Currently, the trust has a fleet of 16 container ships with an average daily time charter rate of US$25,750 per vessel.

Thomas Preben Hansen, chief executive of Rickmers Trust Management Pte Ltd (RTM) – the trust’s trustee manager – said that there are no current plans to add vessels to the fleet.

‘We are always on the lookout, but we’ve really been focused on deleveraging the business,’ he said.

In response to a question about whether the trust was currently able to meet its value-to-loan covenants for which it has a waiver of another one-and-a-half years, Gerard Low, RTM’s chief financial officer, said that there is still uncertainty about the outlook for ship values.

‘The value of the ships had stabilised in the early part of this year but as we approach this period, there has been a big increase in orders for new ships,’ he said.

‘The one (variable) that we can control is the loan value. As we accelerate the repayments, we know that we are bringing down the loan value.’

Last year, as part of a move to solve its funding issues, Rickmers signed a term sheet with its lending banks for a five-year extension of its US$130 million top-up loan facility. Under the terms, the criteria of the value-to-loan ratio had been waived. As a condition of the waiver, the trust’s DPU is capped at 0.6 US cent per quarter.

‘We are also watching this closely. When world trade is increasing and stable, the shipping capacity in under control and we have the resources, only then can we confidently say when we are ready to negotiate directly with the banks to get out of this waiver period,’ said Mr Low.

The trust’s counter closed half a cent higher to 41 cents in trading yesterday, before its results were released.