Gulf Navigation shrugged off a fall in first-quarter revenues to report its first profits since 2011, thanks to falling finance and operating costs after the company’s exit from the crude oil tankering business.
The company yesterday announced profits of Dh539,000 for the first quarter of the year, compared with a Dh19.6 million loss for the first quarter of last year.
The rise in profits came despite a 19 per cent fall in revenues to Dh30.9m for the quarter and were attributed to savings in operating and financing costs equivalent to Dh25.2m compared with the first quarter of 2013.
The savings in operating and financing costs happened when Gulf Navigation finally cut its ties with the crude oil shipping sector by selling its two crude oil tankers to DHT Holdings of Bermuda for US$98m in February.
The company’s crude transport operations weighed heavily on the company’s balance sheet last year because of a collapse in international tanker rates, which were responsible in part for a default on loans in July.
Matters came to a head last September and October, when both vessels were seized by disgruntled creditors.
Yesterday’s news lifted Gulf Navigation’s share price 14.7 per cent, making it the day’s biggest riser on the Dubai Financial Market.
Gulf Navigation yesterday confirmed it was appealing a London arbitration award that went in favour of the shipbuilder Chinese Hull over a 2011 contract for the building of two petroleum tankers.
The company has provisioned about Dh229.2m for the award, which was announced in March.
Gulf Navigation is deciding whether to mount an appeal against a second arbitration award, announced in January, that obliges it to pay $10.2m plus costs and interest to Nordic American Tankers of Bermuda.
jeverington@thenational.ae
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