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WRAPUP 1-Euroseas, Star Bulk sail past slowdown worries
August 10, 2011 / 1:30 PM / 6 years ago

WRAPUP 1-Euroseas, Star Bulk sail past slowdown worries

* Star Bulk Q2 adj EPS $0.04 vs est loss $0.07/shr - Thomson Reuters I/B/E/S

* Euroseas Q2 adj EPS $0.02 vs est loss $0.01/shr - Thomson Reuters I/B/E/S

* Euroseas may buy cheap assets

* Star Bulk shares up 5 pct before the bell

By Krishna N Das

BANGALORE, Aug 10 (Reuters) - Dry cargo shippers Star Bulk Carriers and Euroseas Ltd surprised Wall Street with quarterly profits on lower costs, and indicated they were on course to manage debt payments despite a weak market.

Most shipping companies have suffered in the past two years as demand to transport commodities has lagged supply of vessels. This has been compounded by a slowdown in the global economy that has made access to funds difficult.

This fundamental weaknesses will likely drive continual cash flow erosion and covenant pressure within the dry bulk shippers, brokerage Wells Fargo said recently.

But Greece-based Star Bulk and Euroseas beg to differ.

“Star Bulk is a financially sound company with a healthy balance sheet that allows us to successfully manage our debt payments, focus on our growth strategy and reward shareholders, once more with a quarterly dividend,” Star Bulk CEO Spyros Capralos said.

“Our current compliance with all covenants under our loan facilities supports our financial health.”

Star Bulk posted an April-June profit of 4 cents a share, compared with analysts’ projection of 7 cents loss, according to Thomson Reuters I/B/E/S.

General and administrative costs fell 12 percent.

“As of today, our outstanding debt amounts to $257 million with our principal repayment commitments for 2011 reduced substantially compared to last year ....,” Star Bulk CFO George Syllantavos said.

Peer Euroseas posted a profit of 2 cents, compared with an estimated loss of 1 cent a share.

Aside of a 14 percent decline in general and administrative costs, Euroseas also gained from its presence in the healthier containership business.

“As of June 30, ... our scheduled debt repayments over the next 12 months amounted to about $13.7 million, a number low enough to provide us with significant operational cash flow comfort. All our debt covenants were satisfied as of June 30, 2011.” Euroseas CFO Tasos Aslidis said.

CEO Aristides Pittas believes the company’s strong balance sheet presents itself with a chance to buy cheap assets.

“We have been also reviewing opportunities in the drybulk sector, in which we expect the weakness in rates to translate into lower vessel prices,” Pittas said.

Star Bulk shares were up 5 percent at $1.46 in trading before the bell on Wednesday. They had closed at $1.39 on Tuesday on Nasdaq. Euroseas shares were unchanged from Tuesday’s close of $3.54 on Nasdaq. (Reporting by Krishna N Das in Bangalore; Editing by)

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