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Article Excerpt
OPERATOR: Good day and welcome to the Stolt-Nielsen SA first quarter 2009 results conference call. For your information today's conference is being recorded. At this time I would like to turn the conference over to Mr. Niels Stolt-Nielsen, Chief Executive Officer of Stolt-Nielsen SA Please go ahead, sir.
NIELS STOLT-NIELSEN, CEO, STOLT-NIELSEN S.A.: Thank you, welcome to first quarter 2009 earnings release for Stolt-Nielsen SA Together with me on the phone is Jan Engelhardtsen. Before I start, included in this presentation are various forward-looking statements, including statements regarding the intent, opinion, belief or current expectations of the Company or management respect to among other things: goals and strategies, plan for new development, marketing plan, the Company's target market evaluation of the Company's markets, competitions and competitive positions and trends which may be expressed or implied by financial or other information or statements contained here in. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and outcomes to be materially different for any future results, performance or outcome expressed or implied by such forward-looking statements. This presentation that I'm holding, you can follow on the internet on our website, www.stolt-nielsen.com.
If we move then to page four of the presentation, which is the agenda, we will go through Stolt Tankers, Stolthaven Terminals, Stolt Tank Containers, Stolt Sea Farm and then the current market situation and outlook, we'll talk a little bit about what we see in the market today and how we see the future. Jan will take us through the financials, capital expenditure and the liquidity situation of the Company. And at the end we will open it up for questions and answers. If you then turn to page five of the presentation, SNSA's first quarter 2009 highlights, the biggest thing that is occurring that happened in the first quarter was of course we saw the dramatic fall in volume due to the slowdown in the global economy. We also had delivery of the third of six ships from STX Norway Floro yard, that's the stainless steel 43,000-ton deadweight. That's thee third of six ships. We closed financing for the stainless steel ships from STX Floro, and also financing for the SLS ships in Korea. We canceled the first ship due to be delivered from SLS, the 44,000 coated, we canceled ships are intended to go in to the joint venture with Gulf Navigation, we canceled the first one. The yard has notified us that they will be an arbitration because of the cancellation that we did. We will talk about this later.
The Board of Directors recommended there will be no fund dividend for the fiscal year 2008. In other words we end up paying $0.50 for 2008 versus the $1 which we have paid over the last years. And SNSA also recollatoralized or added additional collateral to the $325 million revolver syndicated by Citibank. And that's replacing ships withdrawn for recycling and it puts us in a position we can still withdraw the full amount of $325 million. I will say this is the first time I will say it and I will repeat it several times, Stolt-Nielsen SA is in full compliance with all our debt covenants with all banks and all committed capital expenditures that we have are financed.
Then moving through page six, SNSA's first quarter 2009 highlights continued, and here we see the downturn in the market. The tanker revenue was down 23% due to lower volume and also reduced freight rates in the spot market. Terminal throughputs were down 12%. STC Stolt Tank Containers revenue down 17% and shipments were down 24%. And Stolt Sea Farms revenue down by 7% that's turbot prices and caviar prices needless to say are affected by the downturn. That resulted in a revenue of $392.3 million, a operating profit of $20.5 million, and a net profit of $14.4 million for the quarter. That is down from $52.6 million in the fourth quarter of last year.
If we then move to page seven, this is the variance analysis that we do each quarter. The $52.6 million was the net profit that we reported in the fourth quarter, and if you look all the way to the right you will see $14.4 million, so I will explain here and as I will do for each of the businesses the variances of what this cost to go from $52.6 million down $13.4 million. The biggest red bar that you see on the graph is the tanker operating profit was down by $30 million, again due to volume and lower freight rates in the spot market. Terminal operating profits were actually slightly up, tank containers slightly down, $3.2 million, Sea Farm basically the same and the tax $10.6 million, which is we have a over accrual in STC which we then reversed in the fourth quarter, something we did not do again in the first quarter of '09, which brings us then to $14.4 million net profit.
If you then move to page eight, Stolt Tankers, again you will see here a clear slowdown in our markets, tankers both the revenue gross operating profit and gross profit and operating profits are down. Contract rates remain stable. So we have said that we are approximately 70% contracted, long CUS contract of freight, 30% spot. In the contracts not all of them have a guaranteed volume to be shipped onto the contract, so what we saw in the first quarter was a dramatic reduction in volume shipped on the COAs. We actually saw a 25% reduction in the volume shipped under the COAs and we saw a 50% increase in volume shipped on the spot. That's for us. So the total volume move is not that much down, but more has been shipped under spot versus contract, contract rates remain stable as we say here. The renewals remain fairly flat. The spot rates down approximately 25% in the first quarter.
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