8/22/2007 1:58 PM
Positive trend for Industrial Shipping
· The Group's net revenue rose by 20% to SEK 1,260 M (1,050).
Operating profit for the period increased by SEK 41 M and amounted to SEK 109 M (68).
· On a rolling 12-month basis, the Group's operating profit amounted to SEK 257 M, which corresponds to SEK 8.40 per share after current tax.
· During the second quarter, the offshore market weakened, but earnings remain strong.
· In the Industrial Shipping business area the European Services division reported improved earnings as a result of increased volumes and the effects of implemented market activities but in the Transatlantic Services division the earning declined slightly compared with the corresponding period in the preceding year.
· Consolidated operating profit for full-year 2007 is expected to be in line or higher than the result for 2006.
· Results for January - June 2007:
Net revenue: SEK 1,260 M (1,050)
Operating profit before tax: SEK 109 M (68)
Profit before tax: SEK 107 M (64)
Profit after current tax: SEK 107 M (64)
Profit after full tax: SEK 96 M (63)
On June 30, 2007, shareholders' equity per share amounted to SEK 39.90 (37.90 per share on December 31, 2006).
The equity/assets ratio on the closing date was 38% (40% on December 31, 2006).
Transatlantic's operations, goals and strategy
Transatlantic consists of the Industrial Shipping business area, which comprises two divisions - Transatlantic Services and European Services - and the Offshore/Icebreaking business area. Transatlantic Services and European Services focus on contract shipping, primarily for the forest products and steel industries. The operations of the Offshore/Icebreaking business area are based on combination vessels on long-term contracts and guaranteed income for icebreaking, in addition to other deployment, mainly for rig-relocation in the offshore market.
Transatlantic's business concept is to market, develop and deliver the market's most efficient transport solutions in close and active cooperation with customers.
Transatlantic's goal is to be the market leader in its segments, with profitability that generates a favorable return for shareholders. The goal is a return of not less than 12% on shareholders' equity and an equity/assets ratio that does not fall below 30%.
The Group's strategy for the next few years emphasizes growth and sustainable profitability. Growth will be achieved organically and through acquisition. The Group is also very open to the development of various partnerships aimed at broadening operations or implementing various investments and projects.
The ambitions for growth will require investments in new tonnage and replacement tonnage. These include all divisions and will be conducted without jeopardizing the Group's financial targets. This also means that the Group's tonnage requirements will be partly resolved through charter contracts and by external investors becoming wholly or partly involved in the fleet operated by the Group.
The strategy for and development of the Group places major demands on quality, safety and the environment, as well as awareness of customer demands and a willingness to change.
General developments during the second quarter
During the second quarter of 2007, shipping trends remained favorable as a result of a continued positive global economic trend.
Within Transatlantic's segments, demand and deployment varied. The Offshore/Icebreaking business area noted a slight decline in freight rates as a result of a fewer number of rig-relocations than forecast. In the Industrial Shipping business area, the European Services division reported a favorable volume trend and strong revenue growth during the interim period. The Transatlantic Services division recorded a certain imbalance in the traffic flow across the Atlantic, which adversely impacted capacity utilization.
The Industrial Shipping business area improved its operating profit, which amounted to SEK 22 M (15) for the quarter.
· Earnings for Transatlantic Services were somewhat lower than the preceding year, although the total volume of goods transported was higher than the corresponding period in the preceding year. The fall in earnings was due to imbalances in the traffic flow, with larger volumes from North America than to North America. Results for the quarter were also negatively impacted as a result of traffic disruptions caused by an engine breakdown in leased tonnage.
The division's operating profit was SEK 6 M (10).
· The European Services division benefited from positive volume growth as a result of implemented market activities, and earnings improved compared with the year-earlier period. The division's operating profit was SEK 16 M (5).
During the quarter, deployment and freight rates in the Offshore/Icebreaking business area declined due to a lower degree of offshore activity, which was particularly evident during May. During the period, two vessels commenced long-term contracts, which were entered into at good freight levels. The business area's operating profit was SEK 28 M (38).
The consolidated operating profit for the second quarter was SEK 41 M (50).
Consolidated earnings for the first six months and the second quarter of 2007
The Group's net revenues for the first six months amounted to SEK 1,260 M (1,050). Revenues increased for the three divisions by slightly more than 27%, while revenues for external ship-management assignments declined by SEK 33 M.
For the first six months, the Group's operating profit totaled SEK 109 M (68) and on a rolling 12-month basis, the Group's earnings amounted to SEK 257 M.
Profit before tax totaled SEK 107 M (64). Results include restructuring expenses of SEK 2 M (expense: 4).
Net profit after tax for the six-month period amounted to SEK 96 M (63).
(for complete report see attached file)