Seascope Diversifies From Shipping Base

British shipbroking group Seascope Shipping Holdings Plc plans to diversify further beyond its core business despite expecting better shipping markets this year. The company wants to keep broadening its income base, managing director Duncan Hill said, despite forecasting improved shipping earnings in 2000.

On Thursday the company reported pre-tax profits of 2 million pounds for 1999, down from 3.2 million in 1998, after OPEC oil cuts hit tanker and offshore markets last year. "I would be hugely disappointed if we are not able to announce another significant acquisition which further diversifies our income base this year," Hill said. Hill declined to give details, but signaled that the acquisition would not be related to online broking ventures being set up by some other brokers. In the last few years Seascope has diversified into fee earning maritime finance and marine engineering businesses through the acquisition of GFL and Wavespec.

Those acquisitions, which made a loss of 43,000 pounds in 1999, are expected to be profitable this year, Hill said.

But Seascope also expects shipping markets to recover in 2000 as a result of rising tanker rates, spurred on by increased oil production after OPEC's decision to raise output.

Tougher chartering rules imposed by oil companies after French beaches were polluted early this year by fuel spilled from the 25-year-old tanker Erika were also boosting the market.

Some old ships are becoming virtually unemployable and shortages of modern tankers are squeezing rates upwards.

VLCCs trading westward from the Middle East are already earning $3.3 million for the voyage, compared with $1.7 million in 1999, Seascope said.

Rates are likely to rise through the summer and into the winter months, and new tanker ordering is likely to be boosted by EU legislation banning older vessels, Hill said. Ship sales markets are also likely to be busy and are also being aided by a recent recovery in dry freight rates. Offshore oil exploration markets should start to recover later in the year, particularly if oil prices stay above $20 per barrel, Hill added.