The Great Eastern Shipping Company (500620) Q4 01/02 earnings summary

Executive summary

• FY02 delivered record income and net profit: total income Rs 11,963.5 mn and PAT Rs 2,075 mn, up 5% and 17% YoY, respectively, despite deferred-tax provisioning and a weak market backdrop.

• An optimal mix of spot and period charters helped cushion falling freight rates; restructuring focused on core businesses, global clients, risk management and fleet renewal.

Financial highlights

• Total revenue Rs 11,964 mn vs Rs 11,550 mn; operating profit (PBIDT) Rs 5,048 mn vs Rs 4,739 mn; PAT Rs 2,075 mn vs Rs 1,774 mn.

• Earnings per share Rs 8.80 vs Rs 6.90; cash earnings per share Rs 18.32 vs Rs 14.78.

• Excluding extraordinary items and prior-period adjustments of Rs 103.1 mn, profit for the year was Rs 1,971.9 mn vs Rs 1,765.3 mn.

• Capital investment Rs 4,075 mn vs Rs 1,048 mn; total assets Rs 25,098 mn vs Rs 22,665 mn at year-end.

Outlook and guidance

• Tanker earnings for FY03 may be pressured by lower hedged rates and softer markets on open positions, although exposure to further market declines was described as significantly hedged.

• Global oil demand was projected to grow by 0.42 mn barrels/day in 2002; tanker scrapping was expected to remain high near term, with fleet deliveries accelerating over the medium term.

• Offshore prospects could benefit from ONGC field-recovery programs, private E&P activity and increased deepwater exploration, subject to oil-price stability and tender opportunities.

• Management expected a challenging business environment and planned to pursue available opportunities while maintaining operational excellence.