Rickmers Maritime lost $55 million in the third quarter as charges for canceled ship orders ate up operating profit.
The container ship owner said a one-time charge of $64 million for the cancellation of nearly $1 billion in orders for seven new ships left a $54.59 million net loss for the third quarter.
“Our profitability in the third quarter took a temporary hit, due to a one-off charge associated with the cancellation of our entire committed capital expenditure of $918.7 million,” said CEO Thomas Preben Hansen.
By The Numbers: New Shanghai Containerized Freight Index.
Rickmers paid Polaris Shipmanagement for the cancellation of seven ships. Excluding that charge, Rickmers had a $9.4 million profit from recurring operations.
The previously announced cancellations were part of a refinancing that also included restructuring of loans. As of Sept. 30, the trust’s outstanding bank loans stood at $684 million, down from $775.9 million at the end of last year.
Chief Financial Officer Quah Ban Huat said the cancellations and loan restructurings had “removed all financing uncertainties facing the trust” and that a three-year waiver of loan-to-value covenants sheltered the trust from asset volatility.
“With this stability we can now focus on deleveraging efforts to further improve the financial position of the trust,” he said.
Hansen said operations, charter revenue and income available for distribution by the Rickmers Maritime trust remained strong.
Charter revenue from Rickmers’ existing fleet was $36.68 million, down 4 percent, in the third quarter, because of a smaller contribution from a single ship. For the first nine months charter revenue was up 2 percent to $110.2 million.
Income available for distribution by the trust was $18.3 million, compared with $19.2 million a year earlier. The cancellation payment included a $15 million cash charge that lowered cash flow from operating activities to $15.6 million, compared with $28.6 million a year earlier.
The company has 16 ships. Fifteen are under long-term charters to CMA CGM, Hanjin Shipping, Evergreen’s Italia Marittima and MOL. The other is under a one-year charter. Hansen said Rickmers has locked in revenue of $785 million through 2019 from long-term charters.
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