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TRANSATLANTIC: INTERIM REPORT JANUARY - JUNE 2006

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Continued earnings growth and improved outlook.

  • Comparable units reported increased earnings compared with the year-earlier period and distinctly improved earnings compared with the preceding quarter.
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  • The offshore market improved further during the second quarter and highly favorable earnings were reported in the Icebreaking/Offshore division.
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  • The Transatlantic Services division's volumes were strengthened and the improvement trend in earnings continued.
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  • Implementation of the tonnage renewal through sales and re-chartering of older vessels and the planning of new-builds for Transatlantic Services.
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  • The European Services division is under growth and development.
    Earnings were somewhat weaker than the year-earlier period.
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  • TransLumi Line commenced its operation.
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  • For full-year 2006, the consolidated operating profit for comparable units is expected to improve considerably compared with the result for 2005.
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  • Results for January - June 2006:

    • Net revenue: SEK 1,050 M (1,0891)
    Operating profit before tax: SEK 68 M (651)
    Profit before tax: SEK 64 M (2771)-Earnings per share: SEK 2.10 (9.00)
    Profit after current tax: SEK 64 M (2771)-Earnings per share: SEK 2.10 (9.00)
    Profit after full tax: SEK 63 M (2721)- Earnings per share: SEK 2.10 (8.80)
     
    On June 30, 2006, shareholders' equity per share amounted to SEK 36.40
    (36.80 at the end of 2005).

    The equity/assets ratio at the end of the period was 39% (40% at December 31, 2005).
    1) Excluding operations terminated during 2005. In 2005, the result before tax was influenced by the effects of merges

    Transatlantic's operations, goals and strategy
    Transatlantic conducts shipping operations focused on industrial shipping and comprises three divisions: Transatlantic Services, European Services and Icebreaking/Offshore. Transatlantic and European Services are focused on 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 for 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%.
     
    The Group's strategy for the next few years emphasizes growth and sustainable profitability. Growth will be achieved both organically and through acquisition. The Group is also very open toward 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 strategy for and development of the Group places major demands on quality, safety and the environment, as well as awareness of customer demands and a willingness to change.
     

    General developments in the second quarter
     
    The generally favorable demand trend also continued during the second quarter. Within Transatlantic Service's segment, demand for tonnage was satisfactory with favorable export and import volumes of forest products in the North Atlantic, as well as for traffic in the North American coastal region. However, a tendency toward weakened demand was noted in Transatlantic Services' bulk operations.
     
    Within European Services, volumes increased gradually during the period. The Offshore market was very strong with record market prices on the spot market in the North Sea.
     
  • As a result of increased volumes, earnings for Transatlantic Services improved significantly compared with the year's preceding period. However, the completion of the lengthening of the Finn vessels had a negative impact on earnings at the beginning of the quarter. All vessels are now in service following the completion of the lengthening, which resulted in capacity increasing by approximately 20 percent.
    The division's earnings amounted to SEK 10 M (13).
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  • During the second quarter, the earnings of European Services were also charged with the expenses relating to increased vessel capacity as a result of the proposed market investments, and quarterly earnings were somewhat weaker than the year-earlier period.
    The division's earnings amounted to SEK 5 M (8).

  • Within Icebreaking/Offshore, earnings were considerably improved compared with the year-earlier period, due to very strong demand and extensive utilization of the division's vessels. During the quarter, the offshore fleet increased by one vessel. The division's earnings amounted to SEK 38 M (25).
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    The consolidated operating profit for the second quarter amounted to SEK 50 M (42).

    Consolidated earnings for the first six months of the year and second quarter
     
    The Group's net revenue for the first six months amounted to SEK 1,050 M (1,089). Revenues for the three business divisions increased, while revenue relating to external ship management assignments declined.
     
    The Group's operating profit for the six months amounted to SEK 68 M (65) and profit before tax totaled SEK 64 M (277 excluding divested operations). A loss of SEK 4 M attributable to the divestment of vessels is included in earnings for the first quarter. Earnings for the corresponding period in the preceding year were significantly affected by merger effects, divestments from the Group's Dry Cargo division and reporting effects from the introduction of IFRS.
     
    Net profit after tax for the six-month period totaled SEK 63 M (295).
     
    (For complete report se attached files)

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