WRAPUP 1-Dry bulk shippers Diana, Genco post strong Q2 results

BANGALORE, July 31 (Reuters) - Diana Shipping Inc (DSX.N) and Genco Shipping and Trading Ltd's (GNK.N) quarterly profits soared, beating expectations, helped by stronger freight rates for hauling commodities, such as iron ore and coal, and higher fleet utilization.

Diana Shipping's second-quarter profit more than doubled to $56.7 million, while Genco's profit quadrupled to $60.9 million.

Strong demand from China and India for transporting dry bulk commodities has helped dry bulk shipping companies' post record profits over the last year also boosting their share prices.

"We believe effective expense management and vessel utilization (99.9 percent) led to the beat, as Diana had little-to-no spot exposure during the quarter, somewhat limiting potential top-line upside to expectations," analyst Justin Yagerman of Wachovia Securities wrote in a research note to clients.

Spot charter is fixed on a daily basis and the rates can be lucrative, but may lead to revenue volatility. On the other hand, a fixed, or charter, contract locks in a steady revenue stream.

Analyst Omar Nokta of Dahlman Rose in a note to clients said Genco's profit beat can be attributed to higher revenue as well as lower-than-expected interest expenses.

However, the recent credit crises, uncertainity in global economic growth, and an impending increase in vessel supply has weighed heavily on the shipping companies' share prices.

"We believe the dry bulk fleet will grow faster than demand growth in 2H09-2011, putting downward pressure on freight rates. We also expect expenses to continue to increase," analyst Urs Dur of Lazard Capital Markets wrote in a research note.

Diana Shipping's quarterly average time charter equivalent rate, a measure of daily rental, rose about 65 percent to $47,844, while that of Genco's almost doubled to $40,945.

"Despite lighter activity in the spot market, dry bulk rates have remained relatively steady during the past month, particularly within the Capesize market," analyst Omar Nokta of Dahmnan Rose wrote in a note.

Capesize ships are too large to transit through Panama Canal or Suez Canal and will have to sail around Cape of Good Hope in South Africa or Cape Horn in South America.

Average utilization rate was over 99 percent for both the companies.

Despite strong results for the first six months, the share prices of shipping companies were volatile this year.

Diana Shipping has lost about 5.5 percent of its value so far this year. In contrast, Genco Shipping has gained about 16 percent.

The Baltic Exchange's chief sea freight index .BADI for global raw materials trade soared to a record high of 11,793 points in May, but has fallen since then. The index closed at 8,341 points Thursday.

"The slide continues, though the pace is slow. I keep hearing of a bottom existing somewhere nearby, yet the indices continue to slide," Mike Reardon of International Maritime Exchange (IMAREX.OL) said in a news letter.

DryShips Inc (DRYS.O) and Excel Maritime Carriers Ltd (EXM.N) are due to report their results in August.

Analysts, on average, are expecting DryShips to earn $4.50 per share, excluding items, on revenue of $265.2 million, according to Reuters Estimates.

Meanwhile, analyst polled by Reuters expect Excel Maritime to earn $1.47, excluding items, on revenue of $132.9 million. (Editing by Jarshad Kakkrakandy)