CP SHIPS REPORTS $9-MILLION LOSS FOR 3RD QUARTER
CP Ships incurred a net loss of $9 million for the third quarter, as the former shipping arm of Canadian Pacific reported its first quarterly financial results since it became a stock market-listed company on Oct. 1.
The loss, which includes one-off expenses related to reorganization, compares with a net income of $37 million in the same quarter of last year.
Operating income before exceptional charges was $34 million in the latest quarter, down 26 percent from the $46 million operating result in the third quarter of last year.
CP Ships said the net loss for the latest quarter was partly due to $37 million of exceptional charges. Of these, $17 million represented costs for the company’s spin-off from Canadian Pacific and the remaining $20 million was for costs of rationalizing the organization and closing offices, mostly in North America and Europe. CP Ships closed the management offices of subsidiary Contship Containerlines in Virginia Beach, Va., and Australia-New Zealand Direct Line in California. North American management for those two shipping lines and other CP Ships-owned carriers is now centralized in Tampa, Fla.
The London-based shipping group said the changes will improve efficiency and lower costs.
Revenues for the quarter decreased 3 percent, to $663 million.
Container carryings for the quarter were 469,000 TEUs, up from 464,000 TEUs in the same quarter in 2000. The average freight rate was flat compared to the same period last year.
Ray Miles, chief executive officer of CP Ships, said the company’s latest results outperformed those of competitors.
He acknowledged that CP Ships has lost some market share in the transatlantic trade, and said that the shipping industry is under increasing competitive pressures.
Miles also noted a continuing erosion of freight rate levels, including on the Atlantic route. CP Ships reported an unspecified operating loss on its Asia/Europe service, launched in April.
“Operations across our trade lanes have so far been largely unaffected by increased security in the U.S. and the action in Afghanistan,” CP Ships said. “The increase in war risk insurance is expected to be recovered through freight rate surcharges.”
The company, which trades under the carrier names ANZDL, Canada Maritime, Cast, Contship Containerlines, Lykes Lines and TMM Lines, has postponed part of its investment plans due to current market conditions.
CP Ships reported an operating loss of $2 million for its Asian services, and operating profits for its transatlantic, Australasia, Latin American and other services.
For the first nine months of the year, CP Ships posted a net income of $48 million, down 49 percent from last year, and an operating income of $104 million, down 11 percent.
The shipping group expects earnings through the rest of the year “to remain reasonably firm.” For the full year, return on average capital employed is forecast to be about 12 percent to 13 percent.
However, CP Ships warned that the current outlook for 2002 “is for increased uncertainty until there is recovery to stronger economic growth in North America and Europe.”