forwardloop
23 Apr 2015
info shars mag courtesy of alliance trustHellenic looks to brighter horizonsDry bulk shipping specialist to advance on operational efficiencySeán FlynnA recovering global economy and an improving operational performance both point to an increasingly upbeat outlook for dry bulk fleet operator Hellenic Carriers (HCL:AIM). Challenging market conditions in 2014 – as evidenced by the performance of the benchmark Baltic Dry Index – did not prevent Hellenic’s own performance improving significantly. In the period the group was able to renew its fleet, contain costs and achieve high fleet utilisation despite a difficult backdrop. The Baltic Dry Index which tracks rates for ships carrying dry bulk commodities has declined 36.2% over the past 12 months and at 593, is down 24.2% year to date. Yet the index has been recovering steadily since its 18 February nadir when it plumbed 509. Cautious optimism was the watchword from Hellenic’s chief executive Fotini Karamanli when the Jersey-headquartered shipping firm posted its preliminary results for the year to December earlier this month. Revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) at the £7.5 million cap increased by 89% to $20.6 million and 233% to $1 million respectively and furthermore, Hellenic achieved a 25% increase in its gross daily rate in 2014, outperforming the average Panamax and Supramax daily rates. Hellenic’s fleet (operated through its subsidiaries) grew to 5.9 vessels on average compared to 3.7 vessels the previous year and the group’s decision not to lock vessels in for the long term and focus instead on actively trading in the spot market and under short term period fixtures allowed it to take full advantage of pockets of opportunities presented due to the freight market volatility. and large, Hellenic can point to a strong 2014 with a near doubling of revenue and an encouraging outlook going forward given reduced newbuilding activity and increased scrappage. Analyst Peter Ashworth at Charles Stanley who maintains a ‘Buy’ rating with a 60p price target, sees the stock as under-valued but it is worth bearing in mind that operating losses in 2014 before a non-cash impairment charge amounted to $9 million and gearing rose to 67.1% from 53.4% in 2013. This non-cash impairment charge of $4.2 million related to M/V Hellenic Horizon, a vessel built in 1995, which was subsequently sold. The overall net loss in 2014 was $12.8 million compared to $14.2 million in 2013. Shares says: "At 17p investors could benefit as improving market conditions and ongoing operational efficiencies should see losses continue to narrow."Shares says: BUY Hellenic
