CP Ships volumes slightly up, profits steady in third quarter

CP Ships Limited has announced third quarter operating income of US$ 34 million before exceptional charges, compared with $46 million in the same quarter last year and $39 million and $31 million in the second and first quarters respectively of this year.

Year-to-date operating income came in at $104 million before exceptional charges compared with $117 million in the same period last year. EBITDA was $53 million in the quarter and $155 million year-to-date compared with $59 million and $155 million last year.

Container carryings at 469,000 teu were slightly higher than in the same quarter 2000. The average freight rate was flat compared to the same period last year. In both the second and third quarters this year average freight rates fell 1% compared with the previous quarter. Year-to-date volume at 1.4 million teu was slightly higher than in the same period last year.

"Operations across our trade lanes have so far been largely unaffected by increased security in the US and the action in Afghanistan. The increase in war risk insurance is expected to be recovered through freight rate surcharges," the company stated in a release.

CP Ships incurred exceptional charges of $37 million in the third quarter. Of this, $17 million represented costs for the company’s spin-off from Canadian Pacific Limited. The remaining $20 million was for costs of rationalising organisation and offices, mostly in North America and Europe. This initiative, already in progress, will improve efficiency, reduce costs and strengthen CP Ships’ competitive position.

During the quarter, Lykes Voyager became the eleventh ship to be deployed of the 12 used ships already purchased under the previously announced capital investment programme of about $1.25 billion for ships and containers. Of this programme, uncommitted expenditure of $200 million for ships and $250 million for containers has been postponed due to current market conditions. The remaining plan to acquire 10 new ships and one used ship plus six new ships on long-term charter between mid-2002 and mid-2003 continues on schedule.

"Despite economic uncertainty, slower growth in international trade and competitive pressure from increased industry capacity, we expect earnings through the rest of the year to remain reasonably firm, as indicated at the time of our announcement of second quarter results. For the full year we expect basic earnings per share before goodwill and exceptional charges in the range of $1.50 to $1.55 and a return on average capital employed of about 12% to 13%," the company release stated "After a record performance in 2000 and a solid 2001, the current outlook for 2002 is for increased uncertainty until there is recovery to stronger economic growth in North America and Europe."