OREANDA-NEWS. On 04 June 2009 was announced, that the Supervisory Council of JSC Latvijas kugnieciba had reviewed and approved for consideration the Group’s performance results for the first quarter of 2009. At the result of effective cost optimisation JSC Latvijas kugnieciba has earned net profit at the amount of USD 7,6 million during the first quarter of 2009, regardless of such external factors as low market activity and dramatic decline of freight rates in the shipping market.

With the revenues from the sale of the JSC Latvijas kugnieciba elderly vessel tonnage having dropped considerably the profit attained in 2009 is USD 7,8 million lower compared to the first quarter of the previous year.

“The most important is that also in the prevailing economical recession the performance of JSC Latvijas kugnieciba brings profit and the vessel operating result has even improved compared to the same period a year ago. This has been achieved because of constant assessment of all the costs. However I have to admit that we shall not be able to avoid the down-turn consequences of the economic decline, considering that the demand of tankers for raw material shipments in the world market is much lower than the offer, resulting in strong deterioration of the freight rates for the shipments,” points out Maris Gailis, Chairman of the JSC Latvijas kugnieciba Supervisory Council.

At the end of the first quarter of 2009 the fleet in JSC Latvijas kugnieciba commercial management consisted of 32 tankers, including three vessels chartered in from other shipowners, two LPG carriers and one dry cargo ship. The vessel operating profit has reached USD 20.3 million in the first three months of 2009, the result being 9 per cent or USD 1,7 million higher than for the respective period a year before. This positive indicator was attained because of effective assessment of the operational costs and their economy. The net voyage result was USD 52,7 million during the first quarter of 2009. The result is USD 4,2 million or 7 per cent lower than that achieved over the first three months period of 2008.

During the first quarter of 2009 the majority of JSC Latvijas kugnieciba Tanker fleet was operating on the time charter basis in accordance with the rates agreed before the report period. Unfortunately already in June last year negative tendencies could be observed in the tanker shipping markets, and, with the tendencies prevailing also during the report period, the spot time charter equivalent had reached the level when freight revenues were lower than vessel operating costs. The fast global recession along with intensive delivery of new vessel tonnage in the market caused considerable reduction of the demand for tanker tonnage. Influenced by the difficult external factors the revenues

from the tanker fleet were lower in the first quarter of 2009 compared to the respective period a year ago.

Both the LPG carriers of the JSC Latvijas kugnieciba fleet “Kurzeme” un “Vidzeme” were operating on time charter basis during the first quarter of 2009. The profit indicators of this fleet sector had remained positive, however, they did not reach the level of the year before.

During the report period the only dry cargo vessel of the JSC Latvijas kugnieciba fleet “Telo” also continued to work in accordance with the time charter agreement signed before, but showing slightly lower result than a year before due to currency exchange rate fluctuation.

“In the overall complex situation, the management of JSC Latvijas kugnieciba pays particular attention to the two strategic directions – first, short term challenges aimed at maximum securing the positive financial indicators, and second, strengthening the long term competitiveness by implementation of the fleet renewal programme. I am confident that solving the above strategic tasks JSC Latvijas kugnieciba will be better placed than its competitors at the moment when the world economy will start to recover and the raw material trade will intensify,” underlines Imants Sarmulis, Chairman of the JSC Latvijas kugnieciba Management Board.

The implementation of the Tanker fleet renewal programme has resulted in decrease of the average age of JSC Latvijas kugnieciba Group fleet from 17,5 years at the end of 2005 to 9,7 years at the end of 2008, but the total deadweight had grown from DWT 1,01 million to DWT 1,29 million.

Inaccordance with the tanker fleet development scenario foreseen in JSC Latvijas kugnieciba Operations Strategy for the period till year 2015 there are four medium range tankers being built at “Hyundai Mipo Dockyard Co., Ltd” in Korea. The parameters of the tanker newbuildings ordered are optimum for their comprehensive employment in oil product, chemical cargo and vegoil shipments.

During the report period JSC Latvijas kugnieciba daughter enterprise “LASCO Investment” Ltd. accomplished the acquisition of non-shipping related assets and commenced to work on high quality elaboration of the strategy for investment development and secure its implementation.