DryShips Posts Another Loss

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May 22, 2013

reuters logoMay 22 (Reuters) – DryShips Inc, a drybulk shipper and offshore contract driller, posted a sixth straight quarterly loss and said it did not expect charter rates to improve this year.

Shares of DryShips, considered to be a bellwether stock for the industry, fell as much as 7 percent in aftermarket trade.

Rates for dry bulk ships, which carry commodities such as coal, ore and grains, have been on a relentless decline in the last five years due to an oversupply of vessels and weak demand.

As a result, several shippers have been forced to restructure their businesses and reduce capital spending.

“Even though there has been a recent spike in some drybulk charter rates, we continue to be defensive about the short-term prospects of the shipping markets,” Chief Executive Officer George Economou said.

“… We do not expect any positive sustainable development in charter rates this year.”

Analysts have said rates are expected to remain weak over the next 12 months due to slowing growth in China, the world’s No. 1 consumer of coal and steel.

DryShips said it sold four vessels, which were under construction in China, at a loss of $75.3 million, or 20 cents per share, in the first quarter.

“We have now reduced our newbuilding program to six bulk carriers, two of which are scheduled for delivery in 2013…and four of which are scheduled for delivery in 2014, for which we are considering our options,” Economou said.

The company also said it was in discussions with its lenders to lower debt service requirement.

The time charter equivalent rate — average daily revenue of a vessel per voyage — in its drybulk business almost halved to $11,396 in the quarter.

Net loss widened to $116.6 million, or 30 cents per share, from $47.5 million, or 12 cents per share, a year earlier.

Excluding the sale of its vessels, the company reported a loss of 10 cents per share, in line with analysts’ average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 29 percent to $319.71 million.

The company’s contract drilling unit, Ocean Rig UDW Inc , however posted a first-quarter profit.

It reported net income of $6.4 million, or 5 cents per share, compared with a loss of $46.3 million, or 35 cents per share, a year earlier.

Ocean Rig, which owns and operates 10 offshore ultra deepwater drilling units, secured a loan of $1.35 billion in February to finance the construction costs of its newbuilding drillships.

DryShips shares were down 4 percent at $1.99 in post-market trade, while Ocean Rig shares rose almost 3 percent to $17.70.

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