Algoma Central Corporation has declared sharply lower profits for the three-month period ended December 31.
The company made $16.8 million, compared to $26 million for the same period the previous year.
Earnings per share were $4.33, compared to $6.70 for the same quarter in 2007.
The company issued the following statement:
************************* The corporation is reporting net earnings for the three months ended December 31, 2008 of $16.8 million compared to $26 million for the same period in 2007.
This decrease in net earnings of $9.2 million was due primarily to the following:
- Decreases in the earnings of ocean shipping segment due to reduced results from the self-unloader commercial arrangement.
- Decrease in earnings of the product tanker segment due primarily to lower than expected results for the Algoma Hansa.
- Increase in net foreign exchange losses resulting primarily from the translation to Canadian dollars of U.S. dollar denominated debt due to the weakening of the Canadian dollar.
- A reduction of income tax expense in 2007 of $5.6 million due to lower future corporate income tax rates. For the 12 months ended December 31, 2008, the corporation is reporting net earnings of $41.3 million compared to net earnings of $52.4 milliom for 2007. The decrease in net earnings was primarily due to foreign exchange losses incurred in 2008 compared to foreign exchange gains recorded in 2007 and a tax benefit recorded in 2007 for the reduction in future income tax rates.
Earnings from operations, net of income tax and earnings of non-controlling interest, increased by four percent from 2007 from 2008 due primarily to the following: - The domestic dry-bulk segment earnings improved as higher freight rates and additional operating days for the bulk carriers more than offset higher operating costs primarily due to lay-up spending. Higher fuel costs were recovered through fuel surcharges.
- The improved earnings for the ocean shipping segment were a result of improved earnings from the self-unloader commercial arrangement, strong earnings from positioning cargos for vessels having scheduled regulatory dry-dockings performed in China and operation for the full year of the Honourable Henry Jackman which entered service August 1, 2007. Partially offsetting these improvements was an increase in scheduled regulatory dry-dock costs.
- The real estate segment earnings were up slightly for 2008 due to the gain on sale of a light industrial building and increased rental income.
Partially offsetting the improvements in the previous three segments were the following:
- Decrease in the earnings of the product tankers segment due to the costs and reduced revenue associated with the scheduled regulatory dry-dock of the Algoma Hansa.
- Amortization expense has increased as a result of a full year charge for the Honourable Henry Jackman, the addition of the three geared ocean bulk carriers, and the amortization of the investment in the life extensions of the John B. Aird and the Algolake. The corporation recently concluded an agreement to terminate the lease with the tenant of our Sault Ste. Marie hotel property.
We assumed control of the property on February 1, 2009 and the hotel is now operating as the Waterfront Inn and Conference Centre.
We plan to spend approximately $6 million on a modernization program which will include building improvements and new furnishings and fixtures.
The Waterfront Inn and Conference Centre will continue to operate as a first-class, full-service hotel and coincident with this modernization program the hotel will be re-branded.