DryShips loses big

The acquisition of Ocean Rig hurt DryShips last year as a huge impairment charge sent the George Economou-led company to a $361m annual loss.

A dire fourth quarter ripped through the bulker and offshore owner’s result while newbuilding cancellations, depreciation and interest rate swaps covered the balance sheet in red ink.

George Economou.

DryShips had been well ahead of 2007’s sums in the first nine months, however, and did book a much larger profit on the sale of vessels.

But the figure of $700.46m in a non-cash impairment of goodwill charge relating to the Ocean Rig acquisition was undoubtedly the main culprit behind the large net loss of $361.28m as against a profit of $478.33m in 2007.

For the fourth quarter alone DryShips booked a loss of $1.02bn.

There was a loss on the valuation of interest rate swaps of $207.94m as compared with a reverse of just $3.98m a year ago and depreciation more than doubled to $157.98m as the fleet grew.

DryShips’ average fleet swelled by five units last year and average time charter equivalent (TCE) rates grew from $45,417 to $58,155. However, in the fourth quarter the TCE figures fell from $67,587 to $34,331 as the dry-cargo market slumped.

This meant that, even including revenues from drilling contracts which were not available in 2007, the fourth-quarter revenue figure lagged behind the previous year. Overall, however, sales swelled in the year from $582.56m to $1.08bn.

Operating expenses were well ahead of last year and there was a massive nine times growth in general and administrative expenses of $68.23m.

The dramatic downturn in the bulker market led DryShips to quash a trio of capesize newbuilding orders thus forfeiting $160m in deposits. These cancellations will continue to impinge on this year’s result as a $116.4m hit will be taken in the first quarter.

Similarly, the cancellation of the purchase of nine other capesizes will see DryShips book charges at the start of the year.

There was some good news as DryShips booked a gain of $223.02m on the sale of vessels as against $137.69m a year ago.

Despite the weak result Economou remained “cautiously optimistic” about the company’s prospects going forward, claiming: “DryShips is ahead of the curve in facing the challenges of tomorrow”.

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