Pacific Basin Shipping Ltd, an operator of dry-bulk vessels, said Tuesday it sees a more difficult year ahead for the industry as the ongoing delivery of new vessels will put pressure on freight rates.

The company's CEO Klaus Nyborg described the year 2010 as "not a fully satisfactory year" for Pacific Basin Shipping. It saw its net profit shrink to $104 million from $110 million a year earlier mainly due to a $12.4 million net loss on financial instruments compared with a smaller loss of $4.5 million in 2009, as well as a $19.1 million impairment charge on its investment in Fujairah Bulk Shipping.

The shipping firm posted revenue of $1.27 billion for the year ended Dec 31, up 33.5 percent compared with 2009. The company's basic earnings per share declined to HK$42 cents from HK$46 cents in 2009. The board proposed a final dividend of HK$16.5 cents per share, bringing the total dividend for the year to HK$21.5 cents compared with a full-year dividend of HK$23 cents for 2009.

"2010 was a relatively good year for our dry bulk operation," Nyborg said at a media briefing for the company's full year results.

An expanded fleet and a 16 percent jump in average daily earnings for handysize bulk carriers have shored up what the CEO called their "cornerstone dry bulk businesses". The company's dry bulk operation posted a net profit of $145 million for 2010, 5 percent more compared with 2009.

According to Nyborg, the average spot rate for handysize bulk carriers jumped 45 percent year-on-year in 2010, while that for handymax rose 30 percent. The cargo volume registered a year-on-year rise of 9 percent.

"We expect the market for our dry bulk ships in 2011 will be weaker than in 2010," the CEO said. "Continued excessive newbuilding deliveries," noted Nyborg, will likely stifle freight rates growth.

China Daily

(HK Edition 03/02/2011 page3)