Leasing profits soar at GE SeaCo
Pre-tax earnings of container lessor GE Seaco, a joint venture between GE Capital and Sea Containers, soared 44 percent to $17.1 million in the third quarter, as the business enjoyed rising lease rates and fleet utilization.
Third-quarter revenue rose to $37.5 million from $25.4 million in the same quarter of 2003.
The strong third-quarter results brought pre-tax earnings for the first nine months to $47.4 million, up 52 percent from the year-earlier period.
The fleet owned by GE SeaCo had 99 percent utilization at the end of the third quarter while the “pool fleet” comprising containers owned by Sea Containers and GE Capital and managed by GE SeaCo, had 89 percent utilization.
“In my 40 years in the marine container leasing business I have never seen such demand and high utilization,” said James B. Sherwood, president of Sea Containers. “Our lessees are making excellent profits and are accepting container lease rate increases with a minimum of fuss.”
GE SeaCo took delivery of $225 million of new containers in the nine months ended Sept. 30 and expects to invest $270 million for the year.
Despite some signs of new container prices easing, they have risen again and no short term relief is in sight. Sea Containers said.
“Lease rates have risen in step with new container prices,” it said.
New container purchases are spread throughout the year of purchase but will generate profits for the entire following year, assuring earnings growth in 2005. Sea Containers said there are no signs of slackening of demand.
“Shipyards have full order books through 2007 for new containerships, most of which have greater container capacities than existing ships,” Sea Containers noted. “More containers will be needed to fill these ships.”
The Hamilton, Bermuda-based company reported difficulties finding space on vessels to position empty containers from surplus areas to areas of demand, but said more capacity should open up after the Christmas shipping season.
Sea Containers and GE each own 50 percent of GE SeaCo.