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Published on March 4, 2008

Three of the new vessels have been ordered this year, mainly large ships costing $38 million each.

The additional 18 vessels will lift PSL's fleet to 62 ships in 2013. The company has a fleet of 44 ships with a total of 1.13 million dead-weight tonnes (DWT), or an average 25,688DWT per vessel.

PSL's new ships on order are expected to be gradually delivered from 2010 to 2013, breaking down into four ships in 2010, five in 2011, six in 2012 and three in 2013.

Hashim said about 20 per cent of the payments for new vessels would come from the company's cash flow and the remaining 80 per cent will be funded from bank loans, expecting a interest rate of 1 to 1.2 per cent above the Libor (London Inter-Bank Offer Rate).

"The company is now in talks with banks, expecting to end up with

a loan plan in the next few months," he said.

As PSL employs a conservative business method by signing a large number of long-term contracts for vessel charters, the company did not receive full benefits from an upturn in freight rates last year, said an analyst at Kim Eng Securities.

The Baltic Dry Index marked an average of 7,065 points and recorded a high of 11,039.

Hashim said PSL targeted an average total cost rate per day of $15,000 to $16,000 per tonne for 2008, compared to $12,828 per tonne in 2007. Moreover, long-term charters have already been booked for this year and account for 80 per cent of 16,060 total available days.

He said the company's strategy included ships fixed on long-term charters when markets are high and achieved a 50-per-cent forward cover on a rolling four-year basis, while exploiting the spot market to maximise profit from the spot fleet.

Meanwhile, fourth-quarter normalised earnings last year were Bt655 million, falling 20 per cent quarter on quarter and 36 per cent year on year due mainly to higher tax expenditures from selling 10 older vessels at the beginning of last year.

Its revenues in the fourth quarter were Bt1.9 billion, up 8 per cent on the quarter, but down 18 per cent on the year because of a lower number of vessels.

PLS's gross margin in the quarter was slightly up at 52 per cent, compared to 50 per cent in the same period last year thanks to an increase in freight rates.

Meanwhile, the company's full-year normalised earnings in 2007 were down by 17 per cent to Bt3.02 billion.

Sasithorn Ongdee

The Nation