Dubai shipping company's net loss reaches Dh19.7m
Gulf Navigation posts loss in Q2 after $8m legal dispute payments
Dubai ship owner Gulf Navigation Holding swung to a loss in the second quarter after payments to settle a legal dispute with a Chinese company and incurring maintenance expenses for two vessels.
The net loss of Dh19.7 million in the three months ending June 30 compared with a profit of Dh10.2m in the same period last year, Gulf Navigation said in a statement to the Dubai Financial Market on Tuesday.
Operating revenue rose to Dh33.46m in the second quarter from Dh30.98m in the year earlier period. The company did not provide a total revenue figure.
"Although our financial records show losses in this quarter, it is a necessary step for achieving future gains and will open the door for major achievements in the coming years," said Khamis Juma Buamim, group chief executive of Gulf Navigation.
Gulf Navigation made a $8m payment to settle a legal dispute with a Chinese company over liabilities dating back to 2014, it said. The Dubai shipping company reached a settlement to reduce the amount due by more than half from the original $19m claim, ending the long-running dispute and historical liabilities. It declined to comment on details of the settlement.
"This has permanently closed the disputes and claims incurred by the company in the pre-restructuring and management change phase," Mr Buamim said. "We have also eliminated the burden of these claims and debts that have depleted the company's resources to pay interest and other legal costs."
Gulf Navigation, which owns and operates a fleet of oil and chemical tankers, incurred higher expenses and lost rental revenues in the second quarter when two petrochemical tankers were dry-docked for mandatory five-year maintenance and upgrades. A "substantial amount" of its revenue was allocated towards the upgrades, the company said, without providing specific figures.
Second-quarter operating costs, including ship repairs, increased to Dh28.75m from Dh19.2m in the same period a year ago, it said.
The vessel upgrades will give the company "an advantage" to compete for new contracts in established markets in Europe and North America, Mr Buamim said.
Gulf Navigation plans to double its fleet to 20 vessels by 2020 and issue a $250m Islamic bond to fund the expansion, the company said last year.
In the first six months of 2018, Gulf Navigation recorded a net loss of Dh14.8m compared with a profit of Dh19m in the same period last year.