Mercator Lines on a Losing Streak

Dry bulk shipping firm Mercator Lines (Singapore) Ltd. has posted a loss for the third year in a row amid downturn of the break bulk market.

The company posted a net profit loss for the financial year ending March 31st, 2015  of USD 125.4 million as compared to a net loss of USD 22.8 million in the previous year.

The company’s revenue stood at USD 56.3 million as compared to USD 75.3 million posted in the corresponding period during the previous year.

The company attributed the decrease in revenue mainly to fall in spot/contract rates and unscheduled maintenance of its vessels.

The loss for the year includes exceptional items of USD 91.1 million out of which USD 82.4 million relates to non-cash items comprising of USD 63.5 million for allowance of impairment of property and equipment and USD 18.9 million for provision for onerous contract.

Despite a net loss of USD 125.4 million for FY 2015, the company reported a positive EBITDA of USD 7.7 million.

 “The company continued to outperform the Baltic Panamax Index rates achieving a TCE of USD 9,193 vs the average market rate of USD 6,304 per day. The dry bulk shipping markets are indeed very challenging but given our track record and competitive strengths, the company is confident that it would ride over the current downturn in the industry,“ said Mr. Shalabh Mittal, Managing Director and CEO of Mercator Singapore.

The dry bulk shipping industry continues to remain volatile with the Baltic Dry Index (BDI) dropping from 1,362 points on 31 March 2014 to unprecedented low levels of 509 on 18 February 2015 and gradually improving to 602 points on 31 March 2015.

Falling commodity prices, an oversupply of new bulk carriers and weakening international demand have resulted in a considerable slowdown in global trade and downward pressure on freight rates.

The average market rate for Panamax vessels in FY 2015 was USD 6,304 per day as compared to USD 10,308 in previous year, indicating almost a 39% fall. The market rate for Panamax vessels closed at a rate of USD 4,780 per day on 31 March 2015.

Mercator operates a fleet of thirteen dry bulk vessels, twelve owned and one chartered-in, comprising of geared and gearless Panamaxes/Post Panamaxes/Kamsarmaxes with an aggregate capacity of about 1 million dwt.