Great Eastern Shipping Co Ltd showed a 16 per cent drop in quarterly net profit on lower earnings from ships and loss on sale of assets, and has predicted bleak quarters ahead. "We are looking at a pretty dark tunnel," managing director Bharat Sheth said at a conference call.

The company's net profit for the year ended March 2009 rose marginally by 2 per cent to Rs1,384.82 crore from Rs1,356.81 crore a year ago.

High tanker fleet growth and lower oil prices would put pressure on rates and utilisation levels, while low refining margins and "depressed demand" for products will keep a lid on product tanker rates. "The immediate outlook is very, very weak. Rates would be materially lower in the spot market - both tanker and dry bulk," Sheth said.

A drop in demand for steel, iron ore and coking coal transportation and high fleet growth would be a damper for dry bulk carriers, the firm said in an earnings release to the stock exchanges.

"It's an unprecedented level of volatility we are seeing. 2009 is almost going to be a washout in terms of recovery. 2010 – it's very difficult to know what will happen," Sheth said.

GE Shipping posted a net profit of Rs250 crore, compared with Rs299 crore a year ago on a 32 per cent fall in total income to Rs534 crore. It had a loss on sale of ships worth Rs26.5 lakh as some vessels were sold at a price lower than its book value; and another Rs70 lakh on account of asset impairment, chief executive officer G Shivkumar said.

Asset value of dry bulk carriers has fallen 70-75 percent from their peak while that of tankers has dropped about 50 per cent, Sheth said, adding the firm's net asset value is Rs355 a share.

The company, which has a capital expansion plan of $52 million to buy one tanker in June this year, had contracted to buy two tankers in fiscal 2009 and has sold nine vessels, including five dry bulk carriers and four tankers, it said in its statement.

The firm has a fleet of 39 vessels, with 43 per cent of the ships in spot, and would prefer to keep the ratio titled in favour of spot as it was unfavourable to lock in vessels for long-term contracts at current lower levels, Sheth said.

During the year, the Mumbai-based firm's revenues rose 7.4 per cent to Rs3,083.47 crore from Rs2,870.13 crore a year earlier. The company has declared a third interim dividend of Rs3 per share.

On a consolidated basis including revenues from its offshore subsidiary, Greatship (India) Ltd, the firm's net profit for the full year declined 2.4 per cent to Rs1,417.83 crore from Rs1,453.35 crore a year earlier.