Eitzen order cancellations reduce first quarter losses

Talks over liquidity continue with lenders
Craig Eason - Thursday 21 May 2009

NORWAY’s Camillo Eitzen Group has reported a first quarter net loss of $5.9m, an improvement on its last quarter loss of $495m and $12.9m in the same period a year ago.

The Oslo-listed group is still, however, in discussions with lenders regarding cash flows and liquidity for the rest. Within Eitzen Chemical and Eitzen Gas it has reached agreement on the waiver of covenants for the last two quarters.

Both the chemical and gas divisions have also reached agreement regarding cancellations of newbuilding orders during the first quarter.

Eitzen Chemical, a separately listed company that Eitzen Group controls with a 52% stake, incurred a $7.5m cancellation fee when it walked away from five orders. It has no newbuildings left on its books. Eitzen Gas cancelled all of its remaining newbuilding orders, six 2,500 cu m ships, incurring a $2.5m cancellation fee.

Camillo Eitzen said petrochemical demand remained low, affecting Eitzen Gas, which reported first quarter earnings before interest, taxes, depreciation and amortisation of $8m. The division has implemented a cost reduction plan that has resulted in redundancies and the closure of its Dubai office.

The company’s bulk division has shown a glimmer of hope. Ebitda for the division was $2.1m, compared with a $5.9m loss during the last quarter of 2009 when the economic crisis began to be felt.

The company said that though 2009 started badly, trade picked up, especially dry bulk commodities into China, after the Chinese new year as companies rebuilt their inventories. This upturn had a positive effect on time charter rates for its supramax vessels particularly, which saw rates rise from $4,000 per day to $16,000.

However, the company said that business would continue to be under pressure for the rest of the year. It expects raw material prices to remain low, although dry bulk demand by China and India will have a short-term positive effect.

Eitzen said it recognised that all the sectors where it operates were facing weak markets and it would continue the implementation of the action plan it announced with its 2008 results.

Source: Lloyd's List