Business | Shipping
Diana posts gain in third quarter profits
Diana Shipping Inc, a carrier of commodities including iron ore and coal, said third-quarter profit gained 14 per cent on higher rates and a larger fleet.
- Bloomberg
- Published: 23:50 November 16, 2008
New York: Diana Shipping Inc, a carrier of commodities including iron ore and coal, said third-quarter profit gained 14 per cent on higher rates and a larger fleet.
Net income rose to $57,6 million (Dh211,59 million), or 77 cents a share, from $50.4 million, or 78 cents, a year earlier, the Athens-based company said on Monday.
The average of four analyst estimates compiled by Bloomberg was 75 cents. Sales climbed 78 per cent to $87,4 million.
Diana was able to avoid record shipping-rate declines in the quarter by keeping its fleet under multiple-voyage, or time- charter, contracts. Chief Executive Officer Simeon Palios, citing fewer buyers and lower prices because of the credit crunch, suspended future dividend payments to have cash on hand for possible ship purchases.
"They have contract cover and the best balance sheet in the dry-bulk group," said Urs Dur, a Lazard Capital Markets analyst in New York.
Diana declined $2.93, or 21 per cent, to $11 in New York Stock Exchange composite trading on Friday, the lowest price since July 21, 2006. The shares have fallen 65 per cent this year. Yesterday's decline was the biggest since the company's initial share offering in March 2005.
The Baltic Dry Index, a measure of shipping costs on international trade routes, posted record daily, weekly, monthly and quarterly declines in the three months ended September 30. The index dropped 66 per cent in the quarter.
"We believe Diana is the best-positioned of the US dry- bulk players to capitalise on a weak vessel value environment," Gregory Lewis, an analyst at Credit Suisse in New York, said in a statement yesterday. Lewis has an "outperform" rating on the shares but doesn't own any.
Dividend Suspended
The company declared a quarterly dividend of 95 cents a share, up 64 per cent from 58 cents a year earlier, before suspending future payments.
"We believe we are now entering a period of low charter rates and vessel prices," Palios said in the statement.
"Diana has been very cautionary on the market, the most cautionary of any dry-bulk player," said Dur, who has a "buy" rating on the shares and doesn't own any. "They have a very low debt model."
Diana has a net debt to capital rate of 17 per cent, and some of its peers have approximately three times that, allowing the company to take advantage of declining ship prices Lewis said.
"By suspending the dividend we free up cash to make investments, such as vessel acquisitions, which can deliver significant returns," Palios said in a conference call with analysts and investors. We do not anticipate having any difficulties finding enough ships to purchase."
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