PST – BT

PST’s Q1 distributable income surges

Revenue in Q1 boosted by four new vessels

AS the global economic slowdown and credit crunch continue to erode demand, freight rates for containerships and tankers are likely to remain depressed this year.

For instance, the Baltic (Dirty Tanker) Index has dropped 46 per cent since the start of this year despite the tanker sector being traditionally more resilient, says Pacific Shipping Trust (PST).

But PST – which leases vessels to charterers on long-term bare-boat or time charters – registered stable growth for Q1 ended March 31, as revenue was boosted by four new vessels.

Total distributable income surged 75 per cent year on year to US$6.5 million, from US$3.7 million. Minus the 10 per cent of income retained as part of PST’s policy of long-term strategic development, US$5.8 million will be distributed, translating to distribution per unit (DPU) of 0.98 US cents, compared with 0.97 US cents previously.

Net profit grew to US$6.6 million in Q1 2009, from US$466,000 in Q1 2008.

Gross revenue rose 72 per cent to US$15.2 million, on the back of full-quarter contributions from four new vessels delivered in 2008 – Kota Naga, Kota Nabil, CSAV Laja and CSAV Lauca.

‘PST’s current portfolio of 12 vessels is fully financed,’ said PST Management chief executive Alvin Cheng. ‘We continue to amortise our loans on a monthly basis to maintain a conservative debt-to-equity ratio. This will provide the headroom for financing should there be opportunities for new acquisitions in the future.’

Last week, PST gave an update on one of its charterers, Latin American line Compania Sud Americana de Vapores (CSAV), which is restructuring to strengthen its operating cash flow and consolidate its South American franchise.

CSAV, which is looking to boost its financial position by about US$750 million, chartered CSAV Laja and CSAV Lauca from PST on five-year time-charters from September and November 2008 respectively.

As part of its restructuring plan, CSAV has asked shipowners to assist by temporarily reducing charter hire payments about 30 per cent, part of which will be capitalised.

However, participation in the scheme is on a voluntary basis.

CSAV accounts for 30 per cent of PST’s top line but contributes less than 20 per cent of its operating cash flow. While loan repayments may not be an issue for PST, distributable income could be affected.

Mr Cheng has said previously that PST’s cash conservation strategy will allow it to meet its current financial obligations should an agreement be reached with CSAV.

‘Based on current information available, it has been determined that there will be no significant impact on the carrying amounts of the said vessels and it was determined that the recoverable amounts are above the carrying amounts of the vessels,’ PST said in a statement.

PST units closed half a cent higher at 16.5 US cents yesterday. Books close April 30 and DPU will be paid on May 29.