Euroseas Posts USD 22 Mn 1H Loss

Greek owner and operator of dry bulk and container ships Euroseas reported a net loss of USD 22 million for the first half of this year, compared to a net loss of USD 8.7 million in the same period last year, mainly due to a USD 1.4 million loss on termination of a shipbuilding contract and a USD 14 million impairment charge on investment in a joint venture.

Euroseas saw a 21 percent decrease in total net revenues, that amounted to USD 13.9 million in the first six months of this year, compared to USD 17.6 million in the same period of 2015, due to the decreased average number of vessels. On average, 11.5 vessels were owned and operated during the first half of this year, earning an average time charter equivalent rate of USD 6,967 per day compared to 15 vessels in the same period of 2015, earning USD 6,823 per day.

Euroseas recently cancelled the newbuilding contract with the Dayang shipyard due to excessive delays in the construction of the vessel. The company has demanded the return of its progress payments and other expenses of approximately USD 8.6 million as specified in the newbuilding contract and secured by refund guaranties. The parties have referred the matter to arbitration.

The company also amended its newbuilding contract with the YSJ yard for the construction of a Kamsarmax vessel to provide the Euroseas with the option until December 31, 2016, to change the type of the vessel to be built, buy another vessel built by the yard transferring any payments made under the newbuilding contract, or cancel the newbuilding contract without additional cost.

Furthermore, the company announced that it plans to purchase MV Aegean Express, a 1997-built 1,439 TEU containership for USD 3 million in order to replace MV Cpt. Costas, which was sold during the second quarter of this year.

“While the charter markets for both sectors we operate remain challenging, we have managed to improve the liquidity of the company by restructuring or refinancing some of our loans. Our revised loan profile combined with certain developments in our newbuilding contracts has reduced the required capital expenditures and significantly improved the liquidity outlook of Euroseas. We are now focused on how to take advantage of the low vessel price environment and find opportunities to expand and renew our fleet, as we have done with the replacement of M/V Cpt. Costas with a five year younger vessel for a marginally higher price,” Aristides Pittas, Chairman and CEO of Euroseas, said.

In terms of the company’s future performance, Pittas said that Euroseas remains “guardedly optimistic about the prospects of the markets” because of the significant adjustments in the supply of vessels.

As Euroseas expects a modest improvement of both container ship and dry bulk segments over the next twelve months, Pittas said the company plans to pursue a strategy focusing on shorter term charters and ensuring its vessels remain employed.