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CSAV narrows losses in Q1

CSAV narrows losses in Q1
Compañía Sudamericana de Vapores (CSAV) reported a loss of $96m in the first quarter of this year, 53% lower than the same period in 2012 when it lost $205.2m.

CSAV ceo Oscar Hasbun said that the company cost structure improved for the second consecutive quarter, compared with its past performance.

Operating income during this period was $54.2m, excluding a $40m provision to cover possible costs CSAV might have to incur as a result of investigations into breaches of free-competition regulations in the car carrier shipping business.

The results for the first quarter were lower than the loss of $ 23.9m in the last quarter of 2012, influenced by the seasonality of the industry, as a result of New Year and Chinese New Year celebrations, that normally impact negatively on Asian trade routes.

Better market conditions and cost efficiencies helped improved the operating result compared to the same period of 2012, said Hasbun. “What we consider to be most important are our long-term prospects. For another consecutive quarter, CSAV has a more efficient costs structure compared to the company’s historic performance”, he stated.

However, the year continues to be a challenge because “the industry’s situation continues to show volatility as a result of oversupply and global economic news so, as we have anticipated,” explained Hasbun.  “Nevertheless, we expect that the weak financial position of most of the industry players will be a catalyst for permitting rates to recover from their present level in the next quarters,” he added.

A $500m capital increase approved in April this year will provide CSAV with better foundations to face these kind of difficult business conditions in the future, said the company statement. It will allow CSAV to finance the purchase of seven 9,300 teu vessels, increasing the proportion of the liner’s owned fleet to 55%, up from 37%. With this investment, chartering costs will fall further and additional savings will be achieved in fuel consumption.

The capitalisation exercise will also be used to repay the company’s debt with Banco Latinoamericano de Comercio Exterior (Bladex) of $140m, drawn in April to enable CSAV to prepay a debt of $258m it had with AFLAC, with a discount of 46%. This transaction produced a gain of $53.8m that will be reflected in the second quarter financial results of this year.

 

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