Gulf Navigation Holding has reported a loss of Dh24.83 million (US$6.76m) in the second quarter as the chemical and oil tanking company struggled to offload vessels from its fleet.
The results, a reversal from earning Dh20.52m in net profits over the second quarter last year, capped a "difficult" time that the company "had to face", said Abdullah Al Shuraim, the chairman of Gulf Navigation.
The company, which is based in Dubai and is traded on the Dubai Financial Market, reported marine assets worth Dh2.57bn. It booked losses relating to the declining value of its Probo-type vessels, which can be used for both chemical and oil tankering.
The values for these vessels dropped Dh5.9m, while Gulf Navigation was also hit by costs relating to the disposal of these vessels totalling Dh16.5m, and Probo trading losses of Dh4.6m. Had it not been for these challenges, the company would have earned a net profit in the second quarter of Dh2.36m, it said.
Gulf Navigation also reported operating revenues fell 3.7 per cent to Dh78.5m over the second quarter compared with the same period a year ago.
"The removal of the Probo fleet, although very difficult, was a necessary step that the company had to take," Mr Al Shuraim said. "The further losses incurred in this process were unfortunate but are indicative of the state of play within this market segment."
Looking forward, Mr Al Shuraim said the company could now look forward and "focus on the key strategic targets that we have set ourselves", including the continued expansion of its fleet of crude-oil tankers, creating a new Saudi tanking company, as well as structural realignment of its organisation.
Gulf Navigation said yesterday it had taken "significant steps" in incorporating the new entity in Saudi Arabia in conjunction with King & Spalding, an international law firm.
As part of its restructuring, Gulf Navigation this year embarked on a five-year strategic plan calling for the expansion of its VLCC (very large crude carrier) fleet to nine vessels, with a total carrying capacity of 18 million barrels, as well as growing its fleet of chemical tankers to 12 ships. Other plans call for the development of Aframax carriers, which carry an average of 120,000 deadweight tonnes, as well as offshore work boats.
The company is building two VLCC carriers that will join the fleet next year and 2013 and will be immediately delivered for 10-year charter agreements worth about Dh1.05bn.