Mercator Lines revenue crashed 23% to USD 84.2m

Find out its next game plan.

In a release, Mercator Lines has announced that its revenue for the nine months ended December 31, 2012 registered a decrease of 23% to USD84.2 million as compared to USD 109.3 million for the corresponding nine months of FY 2012.

The decrease in revenue is mainly due to fall in spot rates and renewal of long term contracts at rates lower than previous rates. The dry bulk shipping market continues to remain tough, Baltic Panamax Index (BPI) saw a drop of 59% from 1738 at the closing of Q3 FY 2012 to 710 at
the closing of Q3 FY 2013. 

Loss for nine months ended December 31, 2012 was USD 72.7 million as against Profit of USD 6.8 million for nine months period ended December 31, 2011. Loss includes onetime impact of USD 58.0 million out of which the non-cash loss is USD 38.7 million. 

The Company has proactively initiated a plan to lower its debt and liabilities and enhance its cash flow position. Planned sale of its vessel MV Sri Prem Putli will generate net proceeds of USD 44.4 million.

The Company has also entered into agreements for early termination of charters with the owners of two of its long term chartered in vessels. It is also negotiating change of terms for its third long term chartered in vessel.

Compensation for these arrangements would be in cash and stocks. The proceeds from the sale of MV Sri Prem Putli will be partly used for paying down Company’s debts and partly for payment of compensation & expenses relating to termination and change of terms of long term Chartered in Vessels. 

The above would help the company not only to lower its debt levels but also enhance its cash flows. Basis the current market, the Company would save around USD 25 million over the next two years.