Bangkok: Dry Bulk carrier Precious Shipping Plc (PSL) yesterday expressed confidence that its financial status is strong enough to weather the severe global downturn that it expects to last two years, writes the Bangkok Port . PSL managing director Khalid Hashim states, "The demand situation is expected to remain in a not very healthy manner in the next two years while the (global) credit crunch should help slow down the floods of new ships reaching the market."
Some of the ships that were ordered would not be built given the liquidity squeeze on ship buyers, while deliveries of some vessels would be delayed from their original schedules between 2009 and 2010 to 2012 or beyond.
As much as $500bn in funding is required for ships scheduled to be delivered between 2008 and 2011 and the stress on the financial system means few of those loans will available for shipping companies, he acknowledged.
''We expect the market will recover in the second half of 2010 with the supply side returning to a balanced level,'' Hashim said, adding that the BDI would stay at low levels of around 1,500 to 2,000 for at least two years.
Despite the gloomy market outlook, Khushroo Wadia, PSL's director for finance, stressed that the company's balance sheet was extremely strong. The company has 18 double-hull ships on order, with deliveries starting next year. The total of $398.4 million in credit lines required for the ships have been confirmed without a need to renegotiate terms, he said. Additionally, the comapny intends to replace 25 older vessels in its existing fleet with younger second-hand vessels.
PSL's net profit rose 130% year-on-year in the third quarter to $42.4m despite weakening global trade. It nine-month earnings rose 7.7% over the same period last year to $113.7m.
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