International Shipholding Q3 profits, military contracts

   International Shipholding Corp. said Thursday that it had profit of $2 million in the third quarter ending Sept. 30 compared to a loss of $13.8 million in the same 2010 period.
   In the 2010 quarter the company had incurred a $25.4 million non-cash impairment charge relating to its U.S.-Mexico rail ferry service.
   The company had revenue of $67.1 million in the third quarter compared to $74.4 million in the same 2010 period.
   Niels M. Johnsen, chairman and chief executive officer, said that during the third quarter, the firm was awarded a new time charter contract to transport supplies for the Military Sealift Command to both the Arctic and Antartica. The contract will be performed by a newly acquired 2000-built multi-purpose ice strengthened vessel which is being reflagged in the United States.
   The Mobile, Ala.-based shipping company said that it had a gross voyage profit of $13.4 million. If that $25.4 million non-cash impairment charge is excluded, the company had gross voyage profit of $19.6 million in the third quarter of 2010.
   The company said that decrease was due to several causes including:

• Fewer operating days on the its U.S. flag coal carrier, which had a third party commercial voyage in the third quarter of 2010 in addition to her normal operations under her time charter.
• Lower results from the Rail Ferry service, which had seen an unusual one-time increase in northbound cargo volumes in 2010 due to storm-related track outages. During the 2011 third quarter the Rail Ferry segment operated at 76 percent of capacity, a level that the firm said was “generating our expected results.”
• The company said its  international time charter segment results were higher compared to the prior year period as three handysize vessels and a Capesize vessel generated satisfactory results. The company said its contract of afreightment segment as well as its “other” segment were comparable to the year ago period.

   The company noted that interest expense was higher in this quarter than a year earlier as a result of its decision to purchase two previously leased pure car truck carriers (PCTCs) and additional debt on three handysize bulk carriers placed in service earlier in 2011.
   In a phone call for investors, Johnsen mentioned that the dry bulk shipping industry continues to be in difficult times, but said that “challenging times present opportunities for growth.” He said many shipowners and shipyards are facing defaults or lack  financing and have a need to generate cash. This stimulates the resale of vessels under construction or already trading.
   Johnsen said the company will evaluate opportunities for growth while continuing its “cautious and conservative approach to dealing with the volatility and uncertainty in the dry cargo market as we seek to grow.” He also noted that the availability of ship financing from banks has become more limited, in part because of problems facing European banks. So the company will explore additional means for financing to take advantage of opportunities that might arise.
   He said the company will continue to pursue a strategy of looking for niche opportunities in shipping and maintaining a portfolio of transportation contracts as a hedge against the cyclicality in the shipping industry.
   International Shipholding has a diverse fleet of about 40 vessels that includes PCTCs and other roll-on, roll-off ships, dry bulk carriers, container ships, multipurpose ships, rail ferries, a molten sulfur carrier, and a tanker.