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TRANSATLANTIC: INTERIM REPORT JANUARY - JUNE 2005

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Continued improvement in earnings and strengthened finances

  • The Group also reported improved operating profit during the second quarter, largely due to the positive trend in the offshore market.
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  • During the second quarter, the Dry Cargo division was divested, generating a capital gain of approximately SEK 150 M.
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  • Transatlantic operations were negatively affected by the Finnish labor-market conflict.
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  • Results for the second quarter and the first six months of 2005:

    • (For table sheet see attached file)
     
  • Full-year profit, excluding capital gains/losses and IFRS effects are expected to improve compared with the pro forma results for the preceding year.
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    Transatlantic's operations, goals and strategies
    Rederi AB Transatlantic was formed at the beginning of 2005 as a result of the merger of B&N Nordsjöfrakt AB and Gorthon Lines AB.
     
    Transatlantic conducts shipping operations, focused on industrial shipping, in an organization that, after the divestment of the Dry Cargo operation, comprises three divisions: Transatlantic Services, European Services and Icebreaking/Offshore. Transatlantic and European Services specialize in contract shipping, primarily for the forest products and steel industries. The operations of the Icebreaking/Offshore division are based on combination vessels on long-term contracts and guaranteed income from icebreaking, in addition to other deployment, mainly for rig-relocation in the offshore market.
     
    Transatlantic's business concept is to market, develop and deliver the market's most efficient transport solutions in close and active cooperation with customers.
     
    Transatlantic's goal is to be the market leader in its segments, with profitability that generates a favorable return for the company's shareholders. The goal is a return of 12% on shareholders' equity and an equity/assets ratio that does not fall below 30%.
     
    Transatlantic's Board of Directors has established the Group's strategy for the next few years. In particular, this emphasizes growth and sustainable profitability within the framework of the organization that the Group now has after the divestment of the dry cargo operations. Growth will be achieved both organically and through acquisitions. The Group is also has a high degree of openness to the development of various partnerships aimed at broadening operations or implementing various investments and projects.
     
    The ambitions for growth will require investments in new tonnage and replacement tonnage. These include all divisions and will be conducted without jeopardizing the Group's financial targets. It also means that the Group's tonnage requirements will partly be resolved through charter contracts and by external investors becoming wholly or partly involved in the fleet operated by the Group.
     
    The Group's strategy and development places major demands on quality, health and environment, as well as awareness of customer demands and a willingness to change.
     
    General developments during the second quarter
     
    The shipping economy remained favorable during the quarter, but a certain slowdown in demand was noticeable in some areas. Cargo availability in Transatlatic's segements was positive and demand for tonnage remained strong, which meant continued high vessel prices.
     
  • In the Transatlantic Services Division, cargo availability and capacity utilization were high at the beginning of the quarter, but this scenario was interrupted by an extensive lockout and strike situation in the Finnish forest industry in May and June.
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  • The operations of the European Services Division developed somewhat weaker than in the year-earlier period. The results for European bulk traffic were impacted by the sale of a vessel during the period and by the fact that it was not yet possible to implement price increases to offset higher costs for chartered tonnage.
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  • Within the Icebreaking/Offshore Division, April was a weak month, while demand for tonnage was extremely strong in May and June. Profits developed considerably better than in the preceding year as a result of successively rising freight rates during the period.
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  • The Dry Cargo Division was divested during the quarter, resulting in a considerable capital gain being reported. Operating profit prior to the divestment was favorable.
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  • Rising costs for bunker oil had an adverse effect on Group earnings, which was partly offset by a strong USD exchange rate during the period.
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    The Group's operating profit for the second quarter was considerably better than for the year-earlier period and amounted to SEK 50 M (19).
     
     
     
    Consolidated earnings
     
    The Group's net revenue for the first six months of the year declined compared with the preceding year due to the divestment of the Dry Cargo Division and as a result of the adverse effect of the lockout and strike situation in Finland on the Transatlantic Services Division's operations. Consolidated net revenue totaled SEK 1,238 M (1 284).
     
    Profit before capital costs for the first six months of the year ("EBITDA") amounted to SEK 442 M (155) and the Group's pretax profit amounted to SEK 320 M (38). Profit was positively affected by restructuring items in a net amount of SEK 158 M (0), and - due to the merger of B&N and Gorthon Lines - a dissolution (in accordance with IFRS) of negative goodwill totaling SEK 74 M.
     
    Earnings per share after current tax amounted to SEK 10.40 (1.20).
     
    Earnings for the second quarter and the first six months of the year are presented on the next page and the enclosed six-month accounts.
     
     
     
    For complete interim report see attached file

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