Stolt Nielsen battens down the hatches

Stolt Nielsen battens down the hatches(Apr 2 2009) Stolt Nielsen said first quarter of 2009 results versus those of the fourth quarter of 2008 reflected the impact of the global economic downturn.

The net profit attributable to shareholders decreased to $14.5 mill from $52.6 mill, while revenue decreased to $392.3 mill from $489.5 mill.

Stolt Tankers reported an operating loss of $2.5 mill versus an operating profit of $27.5 mill in 4Q08, reflecting lower volumes and a decline in spot-market rates, partially offset by lower operating costs.

Bunker costs decreased by $39.2 mill in the first quarter, though the positive impact of the decline was partially offset by a $20.4 mill decrease in bunker surcharges and an $8.8 mill increase in bunker-hedging losses.

Commenting on the Company's results, ceo Niels Stolt-Nielsen said: "SNSA's first-quarter results reflect the panic in the global credit markets that we saw late last year. As producers, traders and consumers stopped ordering products, global industrial production plunged. Destocking of inventories followed and parcel-tanker cargo volumes dropped more than 30% on some trade routes. Though conditions stabilised somewhat in the latter half of February, we attributed the change to a modest restocking of inventories following two months of near paralysis in the market.

"We continue to expect 2009 and 2010 to be very challenging years for our industry and the world economy at large”, he said. "In response to lower demand we are redelivering ships on timecharter and bringing forward the recycling of ships. In all businesses we are deferring or cancelling non-committed or non-essential capital expenditures, including newbuildings and a full hiring freeze has been imposed.

"SNSA remains in full compliance with all of its debt covenants and none of the Company's assets have been impaired," he stressed. "All our committed capital expenditures are fully financed."
Stolt Tankers also said that SLS Shipbuilding of South Korea had taken the company to arbitration to challenge the cancellation of a contract for the construction of a 44,000 dwt coated parcel tanker.

She would have been the first in a series of four ships and was originally scheduled for delivery in May 2008, but was allegedly delayed. This was the reason given for the cancellation.
The ruling by the arbitration panel will follow English law.

Source: Tanker Operator