Danaos profits up, but notes deteriorating trades
Danaos Corp., which owns containerships and leases them to liner companies, reported second quarter net profit of $33.7 million compared to $29 million in the same 2007 period.
Operating revenue from continuing operations were $73.9 million for the three months ending June, 30, compared to $62.8 million in the same 2007 period.
The company noted markets in the main transpacific and Europe/Far East trades deteriorated in the quarter. Transpacific trades declined 2 percent to 3 percent, while growth in Europe/Far East trades was only 10 percent in the first half of this year, compared to 20 percent in the half of 2007.
“Peripheral routes in the Middle East, South America, India and intra-Asia, however, have continued to evidence resilience and strong growth patterns. This fact, together with slow steaming that many liner companies began to adopt, will mitigate any adverse effects stemming from reduction in overall demand,” the company said.
“Charter market rates reflected a weakening in the sub-3,000 TEU sizes, giving up the gains of 2007 and returning to 2006 levels,' Danaos said. 'Larger size vessels continue to trade at their highs despite some subletting activity.”
The company added that “the long-term fixed rate charters under which the company’s vessels are deployed protect us from current charter market volatility.”
Danaos noted that “a difficult to quantify, but yet important factor to the analysis of trends is the effect on the overall volume of Asia related trades due to the Beijing Olympics. Factories close to the Olympic venues have reduced or even stopped production in an effort to alleviate pollution and this effect is taking its toll on China’s export activity.”
It predicted that trends in demand should become clearer during the third quarter as the impact of the crisis in financial markets, rising commodity prices and inflationary pressures are reflected in revisions to economic growth projections.
The Danaos fleet comprises 38 containerships aggregating 150,870 TEUs, and the company has a contracted fleet of 33 additional containerships aggregating 239,215 TEU with scheduled deliveries up to 2011. The Athens-based company’s shares trade on the New York Stock Exchange.