As regular readers would know DRYS is has been one of my favorites for some time, both myself and Paul have published a number of research articles on this one including a report on how DRYS was trading well behind the Baltic Index. DRYS and GE marked our financial services divisions first “house trades” over the last few months and Buzz Inc has good sized positions in both.
DryShips Inc reported better than expected quarterly earnings, helped by the recent rise in spot charter rates that the Baltic Index indicated 2 months ago. Drys also seen an increased contribution from its offshore drilling segment.
Charter rates for drybulk ships which carry commodities such as iron ore, coal, and grains have been improving over the last few months. Day rates for capesize ships averaged about $40,000 a day for the second quarter, double the first-quarter average of about $20,000. “The last several months the dry bulk freight markets have recovered to healthy levels led by strong growth in China,” Chief Executive George Economou said in a statement.”We are also beginning to see signs of improvement from other regions, with steel mills in Europe, Japan and elsewhere restarting idle capacity,” he added.
DryShips claims it now has about 87 percent of its shipdays in 2009 and 2010 fixed, which would by my estimates deliver bumper earnings in the next few quarters.
In the second quarter of 2009, the company reported a net profit of $52.8 million, 24 cents a share, compared with $299.8 million, $6.95 a share, last year.
Excluding items, the drybulk shippers’ earnings for the latest quarter was 25 cents a share. Analysts, on average, had expected earnings of 23 cents a share.
Total revenue fell 30 percent to $210.5 million, caused by the crash in charter rates from last year. Analysts had forecast revenue of $202.9 million.
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