Monday, November 14, 2011

CSAV - financial information

Here's the English version of the CSAV news

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translated by Nicolette Llamas
From MundoMaritimo 11-11-11:

CSAV is continuing to navigate turbulent waters given that in the third quarter, additional negative numbers will be added to the US$525 million that it lost in the first half of the year. That is how a recent Corp Research report is determining that the shipping line would report a negative balance of US$315 million in the July through September period, with which it will accumulate a US$840-million loss in the first nine months, estimating on the market that it would rise above US$1.1 billion in 2011.

However, in this case, the scenario is more complex since, unlike the first six months during which the loss was due to a 44.8% rise in costs that counteracted a 19% rise in sales, in the third quarter, revenue would drop 13.2%, totaling US$1.401 billion for the period, within the framework of the reduction in the size of the company that Luksic Group is promoting. In turn, CSAV’s EBITDA would be negative US$277 million as opposed to US$196 million in the black for the same period in 2010.

And for the rest of 2011 and next year, the scenario would not be favorable either, given that the shipping business will continue to have a strong imbalance between supply and demand since, according to the specialized consultant Alphaliner, the world fleet could increase 8.5% this fiscal year and 8.7% in 2012, according to the August order book. In that regard, it is estimated that ocean freight rates will continue to fall since there would continue to be a surplus of transport capacity in the midst of a less dynamic world market, accompanied by high oil prices.

The latest available numbers reveal that in September, CSAV reported a 12.2% decrease in shipped containers relative to the same month in 2010, after adding up the 242,900 TEUs that they moved. Meanwhile, in the third quarter, the company transported 785,100 TEUs, which represented a 3.4% reduction relative to a similar period in 2010.

Leasing factor

CSAV is now much more exposed than the rest to the business’ ups and downs, given that 87.2% of the 90 vessels with which it operates are leased, while the industry average is around 50% owned vessels.

Observing the results from the first two quarters from the shipping lines that report, it stands out that CSAV is by far the one showing the greatest losses, but at the same time, it is second in increasing its sales.

For CSAV, the “leasing factor” is highly significant, first of all because, according to Corp Research, not having its own fleet, it loses the opportunity to participate in the ship-owning business, which implies using the vessels as though they were property assets, and secondly, because leasing them represents around 18% of the company’s total costs. In addition, the investment bank specifies that a disconnect between the leasing price and freight rates has been being generated, “exposing a gap that is damaging to the company’s results.”

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