The Great Eastern Shipping Company (500620) Q4 04/05 earnings summary

Executive summary

• FY05 marked a fifth consecutive record-profit year; total income reached Rs 2,119.23 crore and net profit Rs 816.56 crore. Return on average shareholder funds was 43.80%.

• Fleet expansion lifted total tonnage 22.27% YoY to 3.02mn dwt; 13 vessels were under construction and committed newbuilding capex was Rs 1,443.96 crore.

Financial highlights

• Total revenue was Rs 2,119.23 crore vs Rs 1,426.35 crore; PBIDT was Rs 1,159.05 crore vs Rs 740 crore; PAT was Rs 816.56 crore vs Rs 467.47 crore.

• EPS rose to Rs 42.34 from Rs 24.29; cash EPS increased to Rs 57.32 from Rs 34.86.

• PAT included an exceptional Rs 128.82 crore reversal of deferred tax liability following adoption of the tonnage tax regime; Rs 81.44 crore of transitional deferred tax liability was transferred back to General Reserve.

Outlook and guidance

• Tanker spot rates were expected to remain healthy but below FY05 averages as projected 2005 net fleet growth of 6–7% could reduce utilisation; supply disruptions or stronger demand could lift earnings.

• Dry-bulk freight rates were expected to remain healthy on strong commodity demand; China’s efforts to prevent economic overheating were identified as the largest market risk.

• Domestic offshore opportunities were expected to grow with renewed E&P spending and ONGC platform-revamp projects; Indian port and harbour-tug activity was expected to remain satisfactory.