Eitzen blames downturn for $118m loss

Toby Anderson - Friday 27 February 2009

NORWEGIAN shipowner Camilo Eitzen & Co has blamed the international economic crises and plunging ship values for a massive $118.8m fourth-quarter loss. Camillo Eitzen also broke banking covenants after gas and dry cargo customers lowered contract of affreightment volumes, exacerbated by lower freight rates in the spot market. The convenants were related to the “minimum value adjusted equity ratio”, a statement said, without providing further details.

The company also said that subsidiary Eitzen Gas was in talks to cancel or delay delivery some of the six semi-pressurised and fully refrigerated gas carriers it has on order in Japan. The net loss for the three months through December 31 was $118.8m, compared with a profit of $44.1m in the same period a year earlier, the company said. Oslo-listed Eitzen said it wrote down the value of some of its vessels in tandem with the decline in market values by $237.2m. Of this $40.9m related to the gas fleet, and $196.2m to this chemical tanker fleet.

The company owns and operates 88 chemical tankers and 39 gas carriers. “The uncertainty in future product price development made traders reluctant to go long on shipping capacity,” Eitzen said. “In addition to declining demand, the industry faced difficulties in securing trade credits, which also slowed down the trades.” “This trend has continued” into the first quarter of 2009, Eitzen said. Eitzen Gas said it was evaluating the size and profile of its fleet and was in the process selling some older and under-performing vessels.

“Eitzen Gas is currently discussing a change in the order for 6 semi-ref gas carriers at a shipyard in Japan,” the company said without giving further details. “The negotiations have not been finalized, however it is expected the change will reduce capital expenditures and financing needs for the company in the next 24-36 months.” Eitzen’s fourth-quarter loss is nearly equal to the $117m full-year profit recorded for 2007. The company reported a $75.9m net profit in the third quarter of 2008, $28.7m in the second quarter, and $12.1m in the first quarter.

Source: Lloyd's List