February 27, 2008
BC Ferries reports third quarter loss
British Columbia Ferry Services Inc. (BC Ferries) today released its third quarter results for fiscal 2007/08. The company reported a net loss of C$7.8 million for the three months ended December 31, 2007, compared to a net loss of C$1.8 million in the same quarter last year. Net earnings before extraordinary gain for the nine-month period ended December 30, 2007 were C$67.7 million, down from C$82.0 million for the same period in the previous year.
Due to the seasonality of ferry travel, BC Ferries typically generates higher net earnings in the first and second quarters, which are subsequently reduced by net losses in the last two quarters of its fiscal year. The company utilizes the third and fourth quarters to perform upgrades, maintenance and refits and to undertake mandatory inspections on the majority of its vessels.
For the three months ended December 31, 2007, total revenue increased by C$8.0 million to C$136.5 million while total expenses increased C$14.0 million to C$144.3 million, compared to the same period last year. Revenues for the nine months ended December 31, 2007 increased C$38.7 million to C$516.5 million with expenses in the same period increasing C$53.0 million to C$448.8 million, compared to the nine months ended December 31, 2006.
Capital expenditures in the three months ended December 31, 2007 totalled C$172.0 million and C$251.9 million in the nine months ended December 31, 2007. During the third quarter ended December 31, 2007, C$146.2 million was invested in BC Ferries' three new Super C-class vessels, the Coastal Renaissance, Coastal Inspiration and Coastal Celebration.
"Taking possession of the Coastal Renaissance in December was a major milestone for BC Ferries as we start to see the results of our significant capital investments," said BC Ferries' President & CEO David L. Hahn. "The Super Cs are the centerpiece of our fleet revitalization program that will see 26 new ships in less than 15 years - the largest vessel replacement program in our company's history."
The Coastal Renaissance will enter service in March 2008 on the Departure Bay - Horseshoe Bay route, with the second and third Super Cs, the Coastal Inspiration and Coastal Celebration, entering service between the Lower Mainland and Vancouver Island in the summer and fall of 2008, respectively.
Capital expenditures for the nine-month period ended December 31, 2007 also included C$32.0 million in terminal upgrades, including marine structures, building upgrades and equipment. Over the next five years, BC Ferries plans to invest C$237 million in building and marine structures at its terminals.
"We're undertaking significant upgrades at our terminals to improve the efficiency of our operations and our customers' travel experience," said Hahn. "Current projects include adding new ticket booths at Swartz Bay and Departure Bay, where we are also expanding the holding compound and adding a new retail building."
BC Ferries continues to invest all of its retained earnings into its asset renewal program. As the capital projects are completed and come into service, amortization and financing costs will increase. The company expects this will cause a decrease in its future earnings in the near term.