Atlantic trade lifts CP Ships’ 4th quarter profit

Atlantic trade lifts CP Ships’ 4th quarter profit    CP Ships said higher freight rates, volumes and operating profits in the transatlantic trade helped the carrier group raise its net income 78 percent in the fourth quarter to $41 million, the highest quarterly net income since the company went public in 2001.
   The latest net result compares with a net income of $23 million in the fourth quarter of 2002.
   Operating income in the latest quarter rose 44 percent to $49 million, an improvement of $15 million over the same quarter of 2002. Operating income on the transatlantic trade soared 76 percent to $37 million over the same period.
   Ray Miles, chief executive officer of CP Ships, noted a “significant increase in profitability of the transatlantic segment.”
   Group revenue in the latest quarter rose 12 percent to $841 million, as volume rose 3 percent to 569,000 TEUs and average freight rates increased 8 percent.
   However, CP Ships reported a 1-percent fall in average freight rates between the third and fourth quarters of 2003.
   The company’s transatlantic revenues jumped 16 percent in the latest quarter, with average rates rising 13 percent and traffic levels up 6 percent to 301,000 TEUs.
   CP Ships reported a strong growth in eastbound transatlantic traffic from North America during the fourth quarter, linked to the depreciation of the U.S. dollar, and a “moderate import growth” into North America.
   Miles told a conference of investment analysts Thursday that shipload factors in the transatlantic trade have reached about 75 percent eastbound and the “high 80s or 90 percent” westbound.
   “Things look quite firm going forward,” added Miles, who expects CP Ships to continue to raise transatlantic rates.
   CP Ships, the largest group in the Atlantic trade, is the parent company of Canada Maritime, Cast, Lykes Lines, TMM Lines, Italia Line, Contship Containerlines and ANZDL.
   CP Ships also reported an operating loss of $6 million in the fourth quarter from its Asian services, and higher volumes in the Asia/Americas trade lane. Underlying average freight rates in the Asian trades were 8 percent lower than in the third quarter, due mainly to a planned increase in lower margin import volume from North America to Asia, as well as the effect of seasonally weaker export freight rates from Asia, the company said.
   For the year, operating income before exceptional items rose to $131 million from $83 million in 2002. Return on average capital employed increased to 7.3 percent in 2003 from 5.7 percent in 2002. Net income last year increased 58 percent to $82 million from $52 million in 2002, although this was still below the $135 million net income earned in 2000.
   “With record operating income in the fourth quarter and up nearly 60 percent for the full year, and record volume and sales revenue for both the quarter and the year, we consider these to be outstanding results,” Miles said.
   Revenue for 2003 rose 15 percent to $3.1 billion, as CP Ships’ container carryings increased 9 percent to 2.2 million TEUs, and average freight rates rose 7 percent, reflecting improved market conditions in most trade lanes.
   Miles noted cost pressures on CP Ships from higher vessel charter rates and the adverse effect on costs of the weaker U.S. dollar. In 2003, CP Ships’ cost per TEU was up by 6 percent, despite $75 million of cost reductions.
   CP Ships said continued strong volume and further freight rate improvements in 2004 will outweigh the negative effect of a weaker dollar and higher charter renewals. Earnings in 2004 will exceed those of 2003, the company said.