Leading global gas carrier BW Gas has reported a sharp year-on-year drop in fourth quarter (Q4) operating profit.
Leading global gas carrier BW Gas has reported a sharp year-on-year drop in fourth quarter (Q4) operating profit, saying its results were hampered by a weak very large gas carrier (VLGC) market.
Operating profit in Q4 of 2008 was $2.9 million, compared to $32.2 million in the same period of 2007.
"The fourth quarter of 2008 showed substantially decreasing freight rates for the VLGCs, slightly increasing freight rates for the LGCs and decreasing freight rates for the MGCs, compared to the same period in 2007," BW Gas said in a statement.
"A reduction in bunker prices, driven lower by crude values, softened the blow of lower rates against vessel earnings," it said.
But despite the sharp decline in bunker prices during Q4, its said "bunkering being done in third quarter of 2008 at peak prices still had an adverse effect on earnings" for the company.
In addition, bunker hedges resulted in a loss of $2.1 million in Q4 of 2008, compared to a loss of $0.2 million in 2007, BW Gas said.
The company said it expected market conditions for VLGC in 2009 to be challenging with low rates continuing throughout the year.
Its board of directors have proposed not to pay dividends for 2008 to help rebuild equity in the company, which decreased substantially following changes in the Norwegian tonnage tax regime in 2007. "The board of directors' believes it is important to rebuild the equity to a level that appropriately reflects the risk inherent in the company's business," the statement said.
Bermuda-registered BW Gas is the world's largest owner and operator of LPG (liquefied petroleum gas) carriers and one of the largest independent owners and operators of LNG (liquefied natural gas) carriers. BW Gas owns, part-owns and/or operates a fleet of 70 vessels.