The carrier has “materially improved its operating performance and its financial flexibility by raising tariffs, lowering charting rates, and increasing volumes and financial support from its shareholders. We expect profitability to materially improve during 2010,” the rating agency said.
“After three capital increases for a total of $773 million since mid-2009, shareholders committed to a new capital increase of $400 million. CSAV will likely implement this increase during first quarter 2011,” S&P said. It added the carrier’s operating performance continues to improve due to increasing tariff levels, significantly better trade flows in its core routes, and reduced chartering costs.
CSAV is increasing the portion of its owned fleet from about 9 percent to 16 percent and S&P said this should “result in a more stable and predictable cost base by year-end 2011. This ratio may further increase if the company uses part of the new funding to continue to expand its asset base.”
“CSAV’s credit quality will continue to improve as a result of better market conditions, with support from its more efficient cost base. We also consider the company’s efforts to obtain a larger share of owned vessels as beneficial, as a larger share would increase stability and enhance profit margins,” said a note by S&P.
