Danaos sank into the red in the third quarter but the Greek container ship owner but said it is largely insulated from the weak charter market.
The NYSE-listed company reported a net loss of $7 million in the three months through Sept. 30, compared with an $833,000 deficit in the year-earlier period, largely because of $12.9 million unrealized losses on derivatives.
The Athens-based group also booked $5 million of realized losses on swaps and a $4.8 million non-cash expense linked to its financial restructuring plan.
Adjusted profit declined 11.4 percent to $15.6 million from $17.7 million a year and operating revenue surged 24 percent, or $30.3 million, to $156.3 million.
Danaos attributed the drop in adjusted profit to softer vessel charter rates and the addition of eight ships to its fleet.
“Although the vessel additions to our fleet over the course of the year was accretive to the bottom line, the soft charter market has triggered the cold lay up of four vessels and has also affected the re-chartering of another seven vessels that currently run at operating breakeven levels while they had a positive contribution to earnings during the third quarter of 2011,” the company said.
Chief Executive John Coustas said the company’s business model “largely insulates us” from the weak market, which likely will persist through mid-2013 as 95 percent of revenues are contracted over the next 12 months and only 5 percent subject to rechartering.
The remaining average charter duration of Danaos’ fleet of 64 container ships was 9.9 years at the end of the third quarter and total contracted operating revenues were $5.1 billion through 2028.
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