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NEW
YORK—DryShips Inc., a Greek owner of ships that haul
iron ore and coal, said first-quarter profit more than
doubled on higher shipping rates and a larger fleet.
Net
income rose to $176.3 million, or $4.61 a share, from
$67.8 million, or $1.91, a year earlier, the company
said in a statement released by Market Wire. The profit
beat the $4.15 average of seven analyst estimates
compiled by Bloomberg. Voyage revenue more than doubled
to $232.1 million from $86.7 million.
Ship
operators have been buoyed by record purchases of
commodities by China, whose economy grew 11 percent in
the first three months of the year. The Baltic Dry
index, a measure of bulk shipping rates, was an average
57 percent higher in the quarter than a year earlier.
“If
you’re bullish on dry-bulk rates, then you have to be
bullish on DryShips,” Greg Lewis, an analyst at Credit
Suisse in New York, said. “They still have more spot
exposure than any other US publicly traded shipping
company.” Lewis has an “outperform” rating on the shares
and doesn’t own any.
DryShips,
based in Athens, puts its ships on the spot market
instead of chartering them at set rates in agreements
that can last years, allowing the company to take
advantage of a strengthening market.
“Demand
for commodities remains very robust and demand will
outstrip ship supply over the next 12 months,” Lewis
said.
The
earnings report was released after the close of regular
stock trading. DryShips fell $5.74, or 5.2 percent, to
close at $105 in Nasdaq Stock Market composite trading
late Monday. The stock was up $1.73 at $106.73 at 4:38
p.m. in after-hours trading.
DryShips
operated an average of 38 vessels in the quarter that
earned an average rate of $63,127 a day, compared with
32 ships and an average daily rate of $28,930 a year
earlier.
Included
in this quarter’s results was a gain of $24.4 million,
or 64 cents a share, on a vessel sale. Excluding the
gain, net income was $158 million of $4.13 a share. The
year-earlier quarter included a $30.5-million gain on
the sale of three ships. DryShips said it will realize
$213.5 million in gains for the remainder of 2008 on
vessel sales.
On April
22 DryShips increased its stake in Norwegian oil-rig
owner Ocean Rig ASA to 54 percent, forcing a mandatory
offer for the remaining shares. DryShips chief executive
officer George Economou said he hoped Ocean Rig
shareholders would approve the purchase in early June.
The
company wants to spin off Ocean Rig as a separate unit
within a year, combined with two drill ships owned by
Cardiff Marine, a closely held company founded by
Economou.
DryShips
also said in April it would buy two deep-water drill
ships for $1.6 billion. Rental rates for these ships
have risen as oil and natural-gas companies stepped up
their search for new deposits amid surging prices.
Economou
said he would begin to place some of his bulk fleet on
time charter, a move Lewis supported.
“Given
what he’s doing with the Ocean Rig assets, it makes
sense to fix some vessels to get significant cash flows
and mitigate some risk,” Lewis said.
The
company on May 1 said it would sell three Panamax-ships
built in 1994 and 1995 for $181.5 million, and would buy
three others, a Capesize and a Panamax, both built in
2004, and a new Capesize, to decrease the age of its
fleet. The total purchase price for the three ships is
$397.8 million.
DryShips
said it would realize a gain of $109.2 million on the
sale. (Bloomberg) |
