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Mercator Lines suffers slash in Q3 net profit

Mercator Lines suffers slash in Q3 net profit

Singapore: Mercator Lines suffered a slash in third quarter net profit both quarter-on-quarter and year-on-year as high yielding long-term contracts expired and expenses increased.

The Singapore-listed firm announced net profit for the three months ended 31 December 2010 at $5.09m, plunging 50.4% from $10.26m in the previous quarter and 32% from $7.53m in the same quarter in 2009.

Third quarter revenue of $40.48m showed a decline of 4.3% quarter-on-quarter but an increase of 17% year-on-year, the India-based firm announced Tuesday.

Mercator Lines is expecting freight rates to remain under pressure if fleet supply gathers pace, despite firm demand prospects anticipated in Asian economies. "Continuance of a prolonged low freight rate regime would impact our earnings adversely," it said in a statement.

It added that volatility in the Baltic Dry Index seen throughout 2010 continued during the third quarter, with the index witnessing a continuous fall in January.

"This [falling rates] is a result of both demand and supply side factors; on the demand side due to reduced commodity imports and floods (in Australia), while on the supply side due to increased supply of ship," the company said. [01/02/11]