Rickmers Maritime Fails To Shine In First Quarter

RickmersRickmers Maritime (SGX: B1ZU) announced its first quarter earnings yesterday.  Rickmers is a business trust that focuses on the shipping industry. The trust owns and lease containerships out to global container liner shipping companies. The trust currently owned 16 containerships and they are chartered out on a fixed rate time charters to major shipping companies.

The Shipping Industry is … “Not Hot”

Given the weak market in the shipping industry, Rickmers Maritime is facing some pressure on its operations. Its charter revenue dropped 4% to USD 33.9million. Its vessel operating expenses continues to grow at 13% year on year. Rickmers Maritime suffered a net profit drop of 8% year on year, finishing the quarter with USD 9.8million. This drop was partially mitigated by a lower financing cost.

The trust only managed to generate a cash flow of USD 687,000 for the quarter for its unitholders. Although it has improved from the negative cash flow from last year, it is still insufficient for the trust to fund its distribution. Therefore, the distribution to unitholders has to be funded by its retained earnings. The trust gearing is slightly reduced from 49% last year to 47% this quarter. Total bank debt stands at about USD 429million.

Its fleet faces a dropped in fleet utilisation from 99.7% to 94.3% year on year. This is due to with time taken for preparation and position of two of its fleet and a situation of engine issue with another. The trust currently chartered out mainly to three main container liner companies; CMA CGM, MOL and Italia Marittima, contributing about 92% of total revenue.

The trust anticipates seeing possible recovery of the sector in 2015. 2014 will be a challenging year for Rickmers as it is expecting delivery of a few large ships which might not be chartered out in time. Rickmers Maritime closed on 2nd May 2014 at S$ 0.295. This gives the trust an annualised yield of slightly more than 10%.