Algoma Central Corporation - Operating Results
May 03, 2013
For the Three Months Ended March 31, 2013 and 2012 (restated)
(In thousand of dollars except per share data)
TORONTO, May 3, 2013 /CNW/ - The nature of the Corporation's business is such that the earnings in the first quarter of each year are not indicative of the results for the other three quarters in a year. Due to the closing of the canal system and the winter weather conditions in the Great Lakes-St. Lawrence Waterway, the majority of the domestic dry-bulk fleet does not operate for much of the first quarter. In addition, significant repair and maintenance costs are incurred in the first quarter to prepare the domestic dry-bulk fleet for the upcoming navigation season. As a result, the first quarter revenues and earnings are significantly lower than the remaining quarters in the year.
|Basic and diluted loss per common share||$||0.74||$||0.82|
|Dividends paid per common share||$||0.07||$||0.05|
First Quarter Results
The Corporation is reporting a net loss for the three months ended March 31, 2013 of $28,635 compared to $31,959 for the same period in 2012.
The reduction in the net loss for the quarter reflects a reduced loss in the Domestic Dry-Bulk segment and improved earnings from the Product tanker segment, partially offset with lower earnings from the Ocean Shipping and Real Estate segments. In addition, the Corporation experienced a gain in the 2013 quarter on certain currency contracts related to the Corporation's Equinox Class vessel construction contracts compared to a loss for the same period in 2012. The mark to market gain or loss is dictated by the change in the value of the Canadian dollar compared to U.S. dollar. In the first quarter of 2013, the Canadian dollar weakened by 2011 basis points resulting in a gain and for the first quarter in 2012, the Canadian dollar strengthened by 236 basis points resulting in a loss.
The Domestic Dry-Bulk segment operating loss net of income tax decreased from $34,929 in 2012 to $31,855 in 2013. The decrease was due primarily to lower repair costs, depreciation and insurance expense. Partially offsetting these improvements was a reduction in revenue due to fewer operating days in the 2013 first quarter compared to the prior year as a result of a return to more normal winter conditions and a slower start to the regular shipping season.
The Product Tanker segment operating earnings net of income tax increased from $443 to $1,442. The main factors contributing to the increase in earnings were additional operating days for the domestic tankers due to increased customer demand and fewer days spent in regulatory dry-docking combined with a decrease in repair costs.
The operating earnings net of income tax for the Ocean Shipping segment for the three months ended March 31, 2013 were $3,505 compared to $4,504 for the same period in 2012. The decrease was due primarily to a reduction in earnings capacity due to the sale of the Ambassador in late 2012 and poor operating conditions during the month of February 2013.
The Real Estate segment operating earnings net of income tax decreased from $863 for the three months ended March 31, 2012 to $417 for the 2013 period. The decrease was due primarily to lower earnings from the hotel operations in Sault Ste. Marie.
An additional factor affecting the comparability of the 2013 three-month results to 2012 was a decrease in the gain on the translation of foreign currency denominated assets and liabilities due to the drop of the value of the Canadian dollar compared to the U.S. dollar.
The Corporation announced on April 30, 2013 that the London, UK Arbitration Tribunal hearing a shipbuilding contract dispute involving the Corporation, has found in favour of Algoma. In 2007 the Corporation entered into contracts to build three 16,500 - deadweight ton product tankers in China. Each contract contained provisions that permitted cancellation under certain conditions. These conditions were met in 2010 and the Corporation accordingly issued notices of rescission to the shipyard seeking to cancel the contracts, and demanding reimbursement of the U.S. $35,370 instalments that had been advanced. The matter was taken to arbitration by the shipyard and hearings were conducted before the Tribunal in London in September, 2012
The Board of Directors has authorized payment of a quarterly cash dividend to shareholders of $0.07 per common share. The cash dividend is payable on June 3, 2013 to shareholders of record on May 20, 2013.
Annual General Meeting of Shareholders
Algoma will webcast the annual general meeting of shareholders on Friday May 3, 2013 at 11:30 a.m. EST at http://www.newswire.ca/en/webcast/detail/1144311/1249121
About Algoma Central Corporation
Algoma Central Corporation owns and operates the largest Canadian flag fleet of dry and liquid bulk carriers operating on the Great Lakes - St. Lawrence Waterway, including 19 self-unloading dry-bulk carriers, seven gearless dry bulk carriers and seven product tankers. Algoma also has interests in ocean dry-bulk and product tanker vessels operating in international markets. Algoma owns a diversified ship repair and steel fabricating facility active in the Great Lakes and St. Lawrence regions of Canada. In addition, Algoma owns and manages commercial real estate properties in Sault Ste. Marie, St. Catharines and Waterloo, Ontario.
A recently published economic impact study, commissioned by Marine Delivers, demonstrates the significant role that the Great Lakes - St. Lawrence Waterway plays in supporting the Canadian and U.S. economies. Some 227,000 jobs and $35 billion in economic activity are supported by the movement of goods within the Great Lakes / Seaway waterway. For more information, including access to the full text of the economic impact study, please consult the www.marinedelivers.com website.
This press release may include forward-looking information within the meaning of applicable securities laws including information concerning the business and future results of Algoma. Forward-looking statements in this press release include statements about the purchase of vessels by Algoma. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by this information. The statements in this press release are made as of the date of this release and are based on current expectations. Algoma undertakes no obligation to update forward-looking information, other than as required by law, or to comment on analyses, expectations or statements made by third-parties in respect of Algoma, its financial or operating results or its securities. Algoma cautions that all forward-looking information is inherently uncertain and actual results may differ materially from the assumptions, estimates or expectations reflected or contained in the forward-looking information, and that actual future results could be affected by a number of factors, many of which are beyond Algoma's control, including economic circumstances, technological changes, weather conditions and the material risks and uncertainties identified by Algoma and discussed on pages 13 to 17 of Algoma's Annual Information Form for the year ended December 31, 2012, which is available on SEDAR at www.sedar.com.
SOURCE: Algoma Central Corporation