United Arab Shipping Company (UASC) posted another strong performance in 2005 with turnover increased to over US$ 1 billion for the first time, total container carryings again exceeding the one million teu mark and a net profit for the year of US$115 million.
The Chairman of UASC’s Board of Directors, Mr. Dhiyaa Habeeb F. Al-Khayoun, was delighted with the continued progress in the growth in turnover and development of the Company’s core container liner operation achieved in 2005 while sustaining a strong profit and positive profitability for an eleventh successive year.
UASC’s President and Chief Executive Officer, Mr. Ken Sorensen, was particularly pleased that it had been possible to maintain the Gross profit at close to the level achieved in 2004 in the face of the significant upward pressure on operating costs in 2005 particularly from rising fuel, and fuel related, expenses.
Total container carryings in 2005 increased by two percent to reach a new record for UASC of 1.12 million teus while non-containerized breakbulk cargo slipped to 219,000 freight tons.
Mr. Sorensen said that it would not have been possible to increase the Company’s carrying capacity to meet the container trade growth in all the markets UASC serves in 2005 without adversely affecting profit margins due to the extremely high levels of charter rates and bunker prices prevailing during the year. ‘Of course UASC would like to grow with the market but chartering in tonnage was prohibitively expensive and we had to scale back carryings in some markets in order to meet the growth in demand from customers in our core markets.’
The high costs for chartering in suitable dry cargo vessels in addition to high bunker prices made it necessary to drastically, scale back on breakbulk cargo operations in 2005 to those that could yield a positive result at the prevailing charter rates.
Following a comprehensive strategic review, UASC implemented a major re-structuring of its organization during 2005. Mr. Sorensen said that re-structuring was a cost that UASC had to bear in order to streamline the organisation so that it would be fit to deal with the challenges the Company would face in the future.
Mr. Sorensen pointed out that without the restructuring, and other extraordinary, costs the net profit for 2005 would have exceeded the record (restated) net profit achieved by UASC in 2004.
Looking forward, Mr. Al-Khayoun said that UASC expects that in 2006, the container industry is entering into a period of softer market conditions that could last for a few years whilst the huge backlog of containerships currently on order are delivered and container trade demand grows sufficiently to utilise the additional new capacity.
While the coming years are likely to be challenging ones for the liner industry, Mr. Sorensen said that UASC had taken significant steps in 2005 to strengthen its organisation and operations to meet the envisaged challenges and was indeed now planning to take an increased role in future in the container industry.