SCI Q4 net falls 43 per cent; to buy 35 vessels

17 June 2006

Shipping Corporation has managed to protect its bottom line even as ocean freight rates have softened in recent months. But substantially higher interest costs and lower other income, including profit on sale of vessels, dented its bottom line.

Unlike other shipping companies, SCI operates more on long term contracts which helps smoothen its earnings. The company is embarking on a major fleet acquisition exercise, but margins would continue to be under threat as costs rise further.

For the quarter ended 31 March 2006, net profits declined 42.7 per cent to Rs350.13 crore from Rs611.13 crore for the previous year quarter. Total revenues increased 13.7 per cent to Rs1,089.25 crore from Rs958 crore.

Operating profits increased 15.75 per cent as compared to the previous year quarter while operating margins remained absolutely flat at 35.11 per cent.

Charter hire, bunker costs and port dues for the quarter increased 53.52 per cent during the quarter while staff costs jumped a substantial 152.48 per cent. The company managed to maintain operating margins through a 61.34 per cent reduction in repair expenses and 19.58 per cent fall in other expenses.

Substantial increase for 292 per cent in interest charges affected the bottom line during the quarter. Depreciation charges and tax provisions were almost unchanged. Decline of 23.74 per cent in other income also affected the quarterly numbers.