A Reuters poll of brokerages saw GE Shipping's consolidated September-quarter net profit falling 14.8 pct to 924 million rupees. Sales are expected to be lower at 6.18 billion rupees from 7.16 billion rupees a year ago.
"I am not very bullish on the shipping industry. Dry bulk, especially iron ore exports, fell most in September. Indian iron ore exports fell almost 48 percent in September," said Praveen Lalani, analyst at CNI Research.
"An oversupply of vessels is making recovery a little painful for the sector," he added.
"In the dry bulk segment the rates fell and the BDI (Baltic Dry Index) reduced by 14 percent year-on-year", though tanker rates have improved, brokerage IDBI Capital said in its quarterly earnings preview on the sector.
The Baltic Exchange's main sea freight index which tracks rates to ship dry bulk, has fallen nearly 9 percent so far in 2010 as rising deliveries in the segment hurt rates.
Besides, a smaller fleet compared to last year will hurt sales as GE Shipping sold several vessels over the past year, partly to phase out older vessels.
"GE Shipping will be impacted because of the reduction in fleet. Currently, they are holding only about 33 vessels, significantly down from what they had last year. That will impact topline and earnings in its shipping segment," said a shipping analyst from Mumbai who declined to be named.
The firm has set aside about $573 million to buy 8 more vessels by FY13 and expand capacity.
However, the fall in profits will be somewhat arrested due to growth in its offshore business, which currently contributes about one-third of total sales.
"Whatever difficulties the company is facing in shipping segment would be partly made up for by the offshore segment," the analyst said.
GE Shipping's offshore services unit Greatship (India) Ltd has filed a regulatory application to raise up to $100 million by selling 22.05 million shares in an initial public offering. (Reuters)
