2001 Maritime

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August 17, 2001

Austal enters Egyptian market
Australia's Austal Ships has signed a contract with Egypt’s largest ferry operator. It is Austal’s third new contract in just over a month and, according to managing director Bob McKinnon, signals new market opportunities.

“We are particularly excited by this contract as it creates an opportunity to penetrate the Red Sea region,” he said.

The contract represents Austal’s first sale to the Red Sea region and a first for the Australian high speed ferry industry.

The 56 meter Auto Express high speed vehicle-passenger catamaran will be constructed for Egyptian ferry operator, El Salam Maritime Co of Egypt. El Salam has a fleet of 14 conventional vessels, with this contract signalling the beginnings of a fleet upgrade.

With a maximum speed of 38 knots, the 56 m aluminium catamaran will be the operator’s first high speed ferry.

The vehicle-passenger catamaran will operate between the Egyptian ports of Safaga, Hurghada and Sharm El Sheik and the Saudi Arabian port of Duba (future expansion of the operation will include the Safaga to Jiddah route).

Unitor revenues up
Norwegian-based maritime supply specialist Unitor Group today reported a second quarter profit of NOK 28 million ($3.1 million), or NOK 1.43 per share ($0.16 per ADR), including a one-time gain of NOK 12 million (US$1.3 million), compared with a loss of NOK 30.0 million (US$3.3 million), or NOK 0.1.53 per share (US$0.17 per ADR) in the second quarter of 2000.

Unitor Group revenues in the second quarter were NOK 616 million ($68.1 million). Compared to the same period last year, this is an increase of 2% and confirms a positive trend, says Unitor.

The operating result for the second quarter was NOK 46 million (US$5.0 million), which is a considerable improvement from last year, but slightly down from the previous quarter. Operating costs totaled NOK 222 million (US$24.5 million), which were less than the same period last year.

Business Performance

Unitor Ships Service : The Ships Service division delivers products and service to operating vessels through the world's largest marine supply network. This is Unitor's core business. Sales totaled NOK 991 million ($109.6 million), compared with NOK 954 million ($105.5 million), when adjusted for currency effects. This shows a sales increase of 3.9% overall. This growth has been achieved in an environment where ship operators are maintaining their focus on vessel operating costs.

Sales of marine chemicals increased by 12% during the first half-year. Strong performances were recorded across all product groups, particularly maintenance chemicals and tank cleaning. Unitor's environmental chemicals also showed significant growth, up 24% over the same period last year.

The safety business is targeted as a growth area and showed continued development in the first half, growing by 7.5% over the same period last year. Sales from servicing of fire and safety equipment and systems increased by 8.3%. This business area has been re-organized and a business manager appointed to further develop the safety strategy.

Sales in the refrigeration business area were flat in the first half, due to reduced sales of refrigeration service. Refrigerant sales dropped by 1.1%, with HCFC refrigerant demand weakening, although sales of environmentally compliant refrigerant blends show continuing improvement. Sales of spares and equipment grew by 15.8% over the same period last year. Unitor is now increasing its emphasis on sales of preventive maintenance services.

Overall sales of products for maintenance and repair were firm in the first half. Adjusting for currency effects and for sales of nitrogen generators, which were transferred to Ships Equipment at the beginning of the year, this business area grew by 4.3%. Underlying sales performance in Unitor's traditional product groups remains strong: gas supplies increased by 2.8%, welding sales were up 10.1% and cleaning equipment grew by 6.1%. Sales of bearings and tools also increased although application equipment fell by 6.8% compared to last year.

Unitor Ships Equipment division offers a standardized range of marine systems, equipment and products for newbuildings, conversions and retrofits, served through a global network of sales and engineering offices.

Ships Equipment division revenues totaled NOK 228 million ($25.2 million), compared with NOK 232 million ($25.7 million) in the first half-year, when adjusted for currency effects. The accumulated order backlog reached NOK 592 million ($65.5 million), compared with NOK 468 million ($51.7 million) at the end of June, which is an increase of 26.5%. Unitor's order backlog reflects the fact that most shipyard capacity is booked through 2003 and provides a level of security for future sales.

Ships Equipment division's largest business area is safety, represented by a comprehensive range of fire fighting systems and related products. Sales of safety systems and equipment decreased by 15% compared with last year, due mainly to increased competition in the Asian market. Unitor's response is to further penetrate this market with more competitive safety systems.

Local fire fighting systems have been recently introduced to comply with new marine safety legislation. Following the divestment of Svenska Skum, the company has also established Unitor Fi-Fi Systems AS, specializing in the design and supply of large external water monitors for fire fighting vessels.

Strong growth in sales of Unitor's heating, ventilation and air conditioning (HVAC) equipment has been achieved in the first half, increasing by NOK 17.7 million ($2.0 million) from last year. This equipment has earned a high reputation based upon price and performance, with further growth anticipated as new geographic markets are targeted.

Welding and maintenance equipment sales to shipyards increased by 28%, while the Maintenance and Repair segment as a whole, adjusted for revenues for nitrogen generators that were previously booked in Ships Service, showed a decrease of 27.4%. This is due to normal fluctuations in the delivery schedules for nitrogen generators and a single non-recurring order invoiced in the first-half of 2000. Nitrogen generator orders scheduled for delivery in the second half of 2001 will increase the revenue to last year's level.

Revenue from Marine Contracting, which supplies and installs thermal insulation on LNG and LPG gas carriers, has grown by 7.1%. The newbuilding market for gas carriers has developed positively, with shipyards in Asia and Europe now engaged in LPG and LNG construction. The large market potential combined with a high order backlog should support continued growth for Marine Contracting's insulation business.