Higher rates push up Precious profits

Kalid Hashim, chief executive officer of the company, said that at the end of the first quarter the freight rate was $15,493 per day, compared to $12,874 in the same period last year.

The higher rate pushed the company's first-quarter net profit to $33.40 million or about Bt1 billion, up sharply from the operating profit of $24.87 million or Bt795 million in the corresponding period a year earlier.

The performance improved in the quarter, when Precious Shipping operated with 44 vessels, compared to 48 vessels last year.

Hashim said that the company would continue the strategy exercised in the past one to two years, signing long-term lease contracts with clients.

The contracts minimised risks from freight volatility, he said.

At the end of the first quarter, these contracts covered 90 per cent of the company's capacity, quoting freight rates of $15,511 on average.

He noted that throughout the year, the ratio of long-term lease contracts and capacity, as well as the freight rate, should stay at the same levels as recorded in the first quarter, depending on negotiations.

The company has recently leased four of its 12 new vessels to a client for a period of 60-62 months.

The earnings before interest, tax, depreciation and amortisation from the lease are estimated at about $26 million to $27 million per vessel.

Hashim said that following the recent spikes in oil prices, the company had been indirectly affected by the higher prices of lubricants which are part of maintenance services.

However, clients who rent the vessels shoulder the higher costs of fuel oil.