Natasha Boyden Comments: Diana Shipping Profit Rises 11% as Charter Rates Gain, Fleet is Expanded
August 5, 2010, Bloomberg.com
Diana Shipping Inc., a Greek owner of ships that move commodities including iron ore and coal, said second-quarter profit rose 11 percent as shipping rates gained and its fleet expanded.
Net income rose to $33.9 million, or 42 cents a share, from $30.4 million, or 39 cents, a year earlier, the Athens-based company said today in a statement. Diana was expected to earn 41 cents a share, according to the average of 10 analyst estimates compiled by Bloomberg. Sales jumped 15 percent to $68.7 million.
Diana kept its entire fleet under long-term time-charter contracts, a strategy that helped it avoid volatility in the spot, or single-voyage, market while keeping it from taking full advantage of a 22 percent gain in spot rates.
"Diana positioned itself well for a difficult market by locking in long-term charters,” said Natasha Boyden, an analyst at Cantor Fitzgerald LP in New York who has a “buy” rating on the shares. “The market looks a little worrisome right now with a strong order book that will put pressure on rates.”
Diana declined 5 cents to $13.06 as of 9:34 a.m. in New York Stock Exchange composite trading. The stock has fallen 9.7 percent this year.
Operations
Diana operated an average of 22 vessels during the quarter, up from 19 a year earlier. The fleet utilization rate rose to 99.7 percent from 99.1 percent. Time charters earned an average $33,105 per day, up from $33,073 a year earlier. Daily vessel operating expense climbed to $6,006 from $5,962.
The Baltic Dry Index, a measure of spot shipping rates in the dry-bulk market, averaged 3,307 in the second quarter, up from 2,714 a year earlier, according to London-based Baltic Exchange.
That’s led shippers to increase orders for new vessels, Diana Chief Executive Officer Simeon Palios said in the statement.
“The industry is witnessing a significant order book of new vessels to be delivered in the next two years, which may create further pressure on charter rates and vessel values,” Palios said.
The company said on June 21 that Diana Containerships Inc., its majority-owned subsidiary formed for the purpose of investing in containerships, has entered into agreements to acquire two containerships for about $45.5 million.
The two vessels were delivered on June 29 and July 9, respectively, the company said.
