Navios net dives

Soaring expenses and large exceptional costs saw annual profit dive at Greek bulker owner Navios Maritime Holdings.

Losses on warrants, swaps, doubtful accounts and newbuilding cancellation fees eroded a much-improved sales figure to leave the bottom line 56% down year-on-year.

Angeliki Frangou.

Despite the much weaker return, chairman and chief executive Angeliki Frangou continued to sound optimistic notes on prospects for the dry-bulk market.

“2008 was a challenging year, virtually without precedent in terms of the magnitude and ferocity of deceleration in economic activity,” Frangou said in Navios’ announcement to the NYSE.

“The world is coming to grips with the economic fallout of the credit crises.”

She continued, however: “We expect that 2009 will have economic and other challenges, but we continue to witness data that allows measured optimism for our industry.”

The figures from 2008 were not so rosy, however. Adjusted EBITDA showed a $5.3m loss on warrants, a $2.9m loss on swap losses, a $2.6m write off on doubtful accounts and a $1.5m cancellation fee.

Depreciation and amortisation increased by $25.2m as the fleet grew and as a result of the acquisition of Horamar during the year.

Time charter, voyage and logistics business expenses shot from $558.08m a year ago to $1.07bn this time around while interest income went down $3.1m.

The effect was to send net profit tumbling from $271m in 2007 to $118.53m last year despite revenues soaring 64% to $1.25bn.

Sales were ahead mainly due to a 48% hike in average daily time charter equivalent (TCE) rates of $45,566 while the number of available days grew 19% to 22,817.

Apart from Frangou’s positive musings on the market, Navios also lifted the mood following the weak result by revealing a total of $353.5m in debt financing “with favorable terms in difficult credit conditions”.

The new deal includes a 10-year term deal for $120m secured at 60% of original vessel values to be used to partly fund the purchase of two capesize newbuildings.

There is also a three-year $33.5m convertible loan to partly fund another ship purchase and a $200m two-year revolving credit facility “for general corporate purposes”.

In addition, whilst many US-listed dry-bulk players are axing dividends to keep cash in the coffers, Navios has declared a fourth-quarter payout of $0.06 per share.

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