Qatar Shipping eyes ship, firm acquisitions
Dubai, August 19, 2009
Qatar Shipping Co (Qship), which is merging with Qatar Navigation, plans to take advantage of falling prices in the maritime sector to buy ships and companies over the next 18 months.
Chief executive K K Kothari also told Reuters on Wednesday the shipper -- which owns and runs a fleet of vessels operating in sectors including crude oil, petrochemicals and liquefied petroleum gas -- would post 'good profit' in the second half.
'I see an opportunity to buy,' Kothari said in a telephone interview from Doha. 'We are planning to buy a number of ships ... we are not looking at making any orders, but to buy ships and companies.'
Kothari declined to give details of what type of assets or the number of ships it would look to buy, but said acquisitions would happen in the next 12-18 months.
International shipping has been knocked hard by the global economic downturn, largely due to overcapacity caused by a construction boom that took place before the slump began.
But unlike container shipping, tanker markets have suffered less despite a slump in global oil consumption.
Global shippers have placed orders equivalent to 40 per cent of current world product tanker tonnage, but with 16 per cent of tonnage being scrapped due to a ban on single-hull ships before 2012, overcapacity does not present the same problem to tanker shippers as bulk and container shipping.
'Since mid-2008 some segments (of the market) have fallen 50 per cent (in price) of what they were at their peak and prices are still falling,' Kothari said. Acquisitions were likely to be financed through bank loans, he added.
Qatar, the world's largest exporter of liquefied natural gas, has been on the hunt for overseas assets in the last few months as it looks to diversify its economy away from hydrocarbons and tap opportunities stemming from the economic downturn.
Poland said on Tuesday that Qatar's sovereign wealth fund was considering buying the country's two troubled shipyards.
Profit outlook, merger on track
Qatar Shipping posted a 53 per cent fall in second-quarter profit, according to Reuters calculations, in part due to impairment losses on investments, Kothari said.
'I would say we will see good profit the next half,' he said. 'In a moment when most shipping companies are losing and some closing down, we are doing well and remain profitable.'
The government of Opec member Qatar ordered Qatar Shipping and Qatar Navigation to merge in November as a means of bolstering firms against the crisis.
Kothari said the merger was on track, but declined to give further details.
Qship is also in the process of selling its subsidiary Qatar Engineering and Construction Co (QCon) for about QR400 million ($109.9 million) to Qatar America Consortium (QAAC).
EFG-Hermes cut its short-term and long-term ratings on Qship to 'neutral' from 'buy,' in June, citing a potential sale of its QCon division.
'Overall, the low sale price for QCon and weak shipping markets do not bode well for Qatar Shipping given its impending merger with Qatar Navigation,' EFG said.
Its shares, down 18.67 per cent this year, closed 4.26 per cent down to QR29 a share in line with a general retreat on the Qatar exchange. – Reuters