Precious Shipping blames China's grip on world's supply and demand of cargo ships for its profit slide.

Reporting on its fourth-quarter performance, Khalid Hashim, managing director, saw Precious Shipping's net profits slashed almost by half from Bt6.2 million in 2005 to Bt3.7 million last year.

The company's turnover also dropped by Bt1.84 billion year on year, from Bt1.109 billion, to Bt9.25 billion in 2006.

Last year, the company saw a drop in its average income per ship per day from $13,087 to $12,450 year on year.

To improve its fleet's overall efficiency, Hashim said that company would replace smaller ships, which have a working life of 18.95 years, with medium-size ones.

Hashim said that the company is now focusing on upgrading its fleet. Precious Shipping is planning to use the Bt60 million from the sales of 14 ships to acquire 23 new ones.

The company currently has 44 small handy ships of the 10,000 to 30,000 dead-weight tonnes (DWT) class. Hashim said the number was minuscule compared with the 3,100 ships worldwide.

The small handy ship market is worth about US$590 million (Bt20 billion) and has a total capacity of 1,130,280 DWT.

Hashim predicted that the rental rate for small ships, which make up 50 per cent of Precious Shipping's fleet, would rise significantly in the next five years, and the company plans to hedge the rental price for the next four years.

He added that rental contracts of the remaining fleet would be renewed according to the market price at that particular moment.

Watcharapong Thongrung

The Nation