Resilient Rickmers

A strong financial performance was rung up by Rickmers Maritime through 2009 but the company is planning a newbuilding freeze and shareholders face a further reduction in dividend as the containership owner discusses a bank refinancing.

Rickmers Maritime, a Singapore listed business trust that owns 16 operating containerships reports a net profit for 2009 of $40.7m up 18% on the $34.4m of the previous year and a bottom line of $20.6m in 2007.

Charter revenue for the year rose 43% to $146m on fleet utilisation that was as high as 99.9%. This compares to charter income of $102m in 2008 and $37.6m in 2007.

The Trust which is linked to Bertram Rickmers Hamburg based shipping empire is however planning a distribution for the final quarter of US$0.0057 per unit compared to US$0.0060 in each of the two previous quarters and figures of either $0.0214 or $0.0225 through seven earlier quarters.

The further dividend cut appears to be part of a “cash conservation” drive to improve liquidity as negotiations on financial covenants, financing of newbuildings and refinancing of a $130m top up loan facility due to mature in April continue

Financial uncertainty relating to the negotiations meant Rickmers Maritime was unable to take delivery of the three latest 4,250-teu vessels on its orderbook, the Hanjin Milano, Hanjin Duesseldorf and Hanjin Montevideo.

The Jiangsu Yangzijiang built vessels were however transferred to the Rickmers Group where they have begun a seven year charter to Hanjin pending a settlement with the banks.

Rickmers has also held back on paying a $40m deposit to Hyundai Heavy Industries in respect of the 13,100-teu newbuildings, the Maersk Edinburgh, Maersk Emden, Maersk Eindhoven and Maersk Essen scheduled for ten year charter to AP Moller.

Plans for further newbuildings will also be deferred until financial markets improve.

All but one of Rickmers Maritime’s fleet is chartered out on long term fixed rate charters to leading liner groups such as CMA CGM, Evergreen, Mitsui OSK and Hanjin.

Thomas Preben Hansen, chief executive of Rickmers Trust Management said the year had been one of “unprecedented challenges for the shipping industry, which was plagued by poor consumer demand, depressed freight rates and significant overcapacity.”

“Despite the difficulties, our business model of attaching long-term fixed-rate charters to our vessels protected our cash flow against the surrounding uncertainties, allowing us to continue enjoying healthy increases in our key financial indicators, including charter revenue, operating cash flows and income available for distribution, throughout the year,” Hansen added.

Rickmers Maritime sees signs that the shipping industry is picking up and reports that container volumes in most major trade lanes are continuing a slow recovery.

The trust sees a slight improvement in freight rates with the the number of laid up containerships stabilising.

“We are cautiously optimistic about the positive spillover effects on the container shipping industry as a result of the recovery of the world economy. The first signs of sustainable recovery are apparent in most segments of the container industry,” said Hansen.

“However, operating conditions in the near-term continue to be challenging and counterparty risks remain high. Notwithstanding this and barring unforeseen circumstances, our long-term charters will stand us in good stead in the year ahead,” the Rickmers Maritime chief executive added.

Final quarter figures also showed a healthy trend with revenues reach $38m compared to $29.6m through the same period of 2008 and net profit more than doubling to $15m from $7.2m.

Total dividend for the 2009 year amounts to a total of $16.6m or a 22% of income.

The Rickmers stock which peaked at over SGD 1.70 in mid 2008 is now trading at around SGD 0.37 a little ahead of the one year low of SGD 0.32.