Mr. Greg Wight reports
ALGOMA CENTRAL CORPORATION - OPERATING RESULTS
The nature of Algoma Central Corp.'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.
(in thousand of dollars except per-share data)
For the three months ended March 31,
Revenue $ 50,757 $ 56,951
Net (loss) $ 28,635 $ 31,959
Basic and diluted (loss) per common share $ 0.74 $ 0.82
Dividends paid per common share $ 0.07 $ 0.05
First-quarter results (in thousands of dollars except per-share data)
The corporation is reporting a net loss for the three months ended March
31, 2013, of $28,635 compared with $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 EquinoxClass vessel construction contracts compared with 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 with 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 with 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 with $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,
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 with the U.S. dollar.
The corporation announced on April 30, 2013, that the London, U.K.,
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,
The board of directors has authorized payment of a quarterly cash
dividend to shareholders of seven cents 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.
We seek Safe Harbor.
© 2013 Canjex Publishing Ltd. All rights reserved.