Courage Marine Q1 '08 Results

SINGAPORE, 8 May 2008 FOR IMMEDIATE RELEASE
Courage Marine Group Limited (Courage or the Group), an efficient dry bulk shipper focused on infrastructure and energy-related commodities, began its new financial year on a robust note. The Group reported a strong 32% year-on-year (yoy) rise in net attributable profit (PATMI) to US$12.6 million for the first quarter ended 31 March 2008 (1Q FY08).

Though freight rates have been rather volatile in the past few months, they were still much higher than in the preceding quarter. The Baltic Freight Index (BDI) rose 60% to an average of 7,500 from 4,700 previously. Courage continued to ride this firm freight uptrend, growing its revenue by 29% yoy to US$21.5 million. Average revenue per vessel rose 60% to US$2.7 million from US$1.7 million.

The Group was able to reverse the impact of higher bunker costs on its profitability, as it worked diligently to pare administrative and operating expenses to 2.8% of 1Q FY08 revenue, down from 4.3% in 1Q FY07. This tight control over costs helped push up the corresponding net profit margin to 58.3% from 57.1% previously.

Said Chairman Hsu Chih-Chien: “We are pleased with our performance, which was achieved even though the Group drydocked three vessels for 70 days, including two Panamaxes in the past three months. Vessel utilisation remained at a high 85%, despite severe weather conditions in China that resulted in the closure of several ports for some weeks.

“When fierce snow storms battered China at the end of January, Courage worked rapidly with the local buyers to transport coal from Kalimantan, Indonesia to Guangzhou, China. During this period, we deployed two Handysize bulk carriers to meet this urgent need for coal as China aggressively stepped up efforts to restore power supplies to regions hit by the worst snowstorms in five decades.”

Given the Group’s deep understanding of Asia, coupled with its strong client relationships in the region, Courage is well-placed to meet regional demand for strategic cargoes such as coal and gravel going forward. The Group is actively seeking more of these longer-term affreightment contracts and is confident of building a stable earnings stream from this segment.

Courage believes a voracious appetite for raw materials particularly in giant economies such as China and India will continue to drive them into buying from sources much further afield. This has already resulted in a supply-demand gap for bulk carriers that has precipitated a sharp and sustained rise in freights. The Group believes market conditions will remain positive in the near- to medium-term.

Mr Hsu concluded: “Courage is therefore on the lookout for new and secondhand vessels to add to its fleet, though the timing of the purchases will hinge on price and vessel availability. The Group’s healthy balance sheet, with cash reserves of some US$77 million, will definitely facilitate these future vessel acquisitions.”