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Varun Shipping earnings down 44% on lower freight rates

Varun Shipping earnings down 44% on lower freight rates
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First Published: Fri, May 04 2007. 12 54 AM IST
Updated: Fri, May 04 2007. 12 54 AM IST
Mumbai: India’s largest liquefied petroleum gas (LPG) carrier owner Varun Shipping Co. Ltd reported a 44% fall in net profit to Rs32.62 crore for the fourth quarter ended March 2007, mainly due to lower freight rates and higher staff costs. As a result, the company’s shares fell 5.47% to Rs57 on the Bombay Stock Exchange on a day when the exchange’s bellwether 30-stock Sensex rose 1.48%.
The Mumbai-based company, which is the world’s second-largest owner of mid-sized, fully-refrigerated LPG carriers after the Belgian firm Exmar NV, earned Rs191.34 crore as revenue in the fourth quarter—marginally up, compared with Rs190.35 crore a year earlier.
The company’s net profit for the full year declined to Rs141.35 crore from Rs180.89 crore a year ago. It earned a revenue of Rs672.63 crore in the 12 months ended March, up 4.61% year on year. The firm earns 72% of its revenues from hauling LPG imported into the country by state-run oil firms. LPG is supplied to households for cooking. The government heavily subsidizes the sale price of the LPG cylinders sold by the public-sector oil marketing companies.
The company has recommended a final dividend of 15% for the current year, it said in a statement.
“The average freight rates during the year were lower both in the tanker segment and gas carriers,” Varun’s managing director Yudhishthir Khatau said.
The profit was not to the expectations of the company, he said, adding that the shipping industry has had a “slowdown” this year.
Khatau said the company, which largely ships oil and gas, had been hit as the hydrocarbon sector was adversely affected by generally warm weather conditions in the northern hemisphere, leading to lesser demand for gas.
In the tanker segment, the charter rates were lower during the fourth quarter by about $5,000 (Rs2,05,000) per day from a year earlier, while the difference was as much as $10,000 a day in the third quarter on a year-on-year basis.
In the LPG segment, the charter rates averaged around $24,000-25,000 per day, a fall of 12.5% during the fourth quarter compared with $27,000 per day a year ago.
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First Published: Fri, May 04 2007. 12 54 AM IST