OSG > Media Room > Press Releases.
Overseas Shipping Group OSG is one of the financially stronger tanker companies. Their 1st quarter results are a mixed bag. This is from the press release:
- First quarter TCE revenues were $292.8 million, down from $375.8 million in the first quarter of 2008, driven by VLCC spot TCE rates of $47,228 per day compared with $98,588 per day
- Net income attributable to the Company (Earnings)1 was up 8% to $121.8 million from $112.4 million in the same quarter last year
- Diluted EPS increased 26% to $4.53 per share from $3.60 per share Diluted EPS in the current quarter included $4.83 per share gain on sale of vessels offset by $1.34 per share shipyard and contract termination costs
- G&A expenses decreased 27% to $27.3 million due to Companywide cost control efforts
- Regular quarterly dividend of $0.4375 per share announced April 23, 2009
- With cash balances of $588 million, $278 million in fixed revenue remaining in 2009 and liquidity of $1.7 billion, the Company is well-positioned to weather near-term uncertain freight rate markets and expects to end 2009 in a similar liquidity position as 2008
The drop in VLCC rates is eye-catching, yet if they can continue to earn $40k+ per day in the current environment, they are doing OK. Without gains on sales of vessels, the net for the quarter would have been pretty grim. It will be interesting to see what happens for Q1.
OSG has enough revenue from fixed contracts to cover expenses and overhead. Net income and cash for dividends comes from the earnings in the spot market. The 5% dividend looks secure, but the current very low spot rates for VLCC tankers does not give one a positive feeling concerning the 2nd quarter of 2009 net income.
3 Comments
I’m confused as to how OSG will continue to earn revenue on the 3 vessels they are laying up. Can anyone explain to me how the vessels will earn income while laid up? I fully appreciate that the expenses associated w/ running the ships will be reduced whilst laid up, but how will they continue to “generate income though at a reduced rate” as OSG stated in their earnings call? Many thanks in advance for any insight ~ forgive my ignorance.
Linda, from what I read all ships have to go into drydocking for refirbishment at some point in time. Now with the rates the company can earn with these ships pretty low, it is probably a good time to dry dock them if it is necessary.
If you are not comfortable with how the company is managing their assets I would suggest you find other stocks where you are more comfortable.
OSG – Proved long term support 3/20, this support still holds if the end of week price is above or higher than last week. Short term support failed on 5/11 at $35.83. This result is typical for most of the broad market.
Technical support cannot be reestablished until price stabilization is realized. Unfortunately, broad market index indicators began failing 5/7 through 5/11 and have not yet begun to stabilize. The tide has been receding, and the effect is most unfortunate. I have no indications as of this moment when an intermediate bottom will be reached, the selling is quite dramatic. Good quality equities are the place to be if you intend on holding your equities through the storm, hopefully the losses won’t be too heavy this time around.
Good luck!