November 3, 2005
Aker American reports profit
Reporting on the third quarter of 2005, the Aker American Shipping Group (Oslo Stock Exchange: AKASA) says it has continued to produce good financial results.
The company reported an operating profit of $11.7 million in the year to date compared to an operating loss of $14.7 at the end of third quarter 2004.
Operating revenues as of the third quarter of 2005 were $229.9 million. No revenues were recognized on either ship No. 3 or No. 4 in 2004 since the contracts with Matson were not in place until the first quarter of 2005. The third quarter revenues are lower than the previous quarter as more work were done on the first product tanker in this quarter. There will not be revenues from the product tankers before they are completed and in operation.
Construction continued on the fourth container vessel to be delivered to Matson Navigation Company during Q3 2006. An accident during loading of this ship's main engine in Spain will delay installation, testing and commissioning activity for the vessel. Although this event will lead to a later delivery for this vessel, no negative financial impact is anticipated.
Completion of the first product tanker reached approximately 10% and the first section of the ship was dock mounted in the building dock on October 28 2005. As the shipyard has the ability to build ships in tandem, the engine delay for the fourth container vessel will not impact delivery of first product tanker.
Although the third quarter result is slightly better than anticipated, Aker American Shipping ASA continues to expect that the second half of the year will have a result at the level of first half of the year, with an EBITDA result around $20 million for the year. The company recognizes profit according to percentage of completion which means that there might be fluctuations from quarter to quarter dependent on thw level of activity in the period.
As the transition is made from the sale of Container Vessels to the bareboat charter of Product Tankers, revenues from ship sales will end with delivery of the fourth container vessel in Q3 next year. There will be revenues from participation in ship operations in the Jones Act Product Tanker market starting in Q4 of 2006 when the first product tanker chartered to OSG goes into operation.