CP Ships Reports 3Q Results

CP Ships Limited today announced unaudited operating income before exceptional charges for third quarter 2002 of $33 million, which is $1 million lower than operating income before exceptional charges for same period last year, and a $12 million improvement from the $21 million operating profit in second quarter 2002. Net income for the third quarter 2002 was $17 million, compared to a loss of $9 million. Basic earnings per share was $0.26 before exceptional charges and $0.19 after, compared with last year's $0.35 before and a loss of $0.11 after. "Stronger than expected volume particularly in the TransAtlantic and generally improved average freight rates led to better results for the quarter," said CP Ships' CEO Ray Miles. Volume at 524,000 teu, including Italia Line from early August, was up 12% compared with the same period in 2001, while underlying volume growth excluding Italia Line was up by 7%. The underlying average freight rate increased 3% from second quarter 2002, following five successive quarters of freight rate decline. However, it was still down 10% from third quarter last year. EBITDA before exceptional charges was $56 million and cash from operations was $24 million in the quarter. Operating income before exceptional charges for the nine months ended 30th September 2002 was $48 million against $104 million in same period of 2001 due to difficult market conditions particularly in the first quarter. Net income decreased to $22 million from $48 million. On 6th August 2002 CP Ships completed its acquisition of Italia Line for $41 million including costs. Integration of the ship network and schedules, container fleet and organization is proceeding as planned. At the end of August, CP Ships completed its $181 million purchase of four ice-strengthened containerships, which were previously bareboat chartered. Deferred costs of $6 million related to the now terminated financing arrangements, were written off as an exceptional charge. These two investments were paid for with proceeds from the offerings of 9.6 million common shares and $200 million of ten-year unsecured senior notes both of which closed in early July, raising $275 million net of expenses. In September, CP Ships took delivery of the 4100 teu Contship Aurora, the second of ten new containerships being built under the company's $800 million 23 ship replacement program. She is the first of three ships specially designed to carry a high proportion of refrigerated containers in the Australasian trade lanes, which CP Ships is presently restructuring in partnership with five other shipping companies to achieve more consistent market coverage, improved frequency and better transit times with fewer ships of higher capacity at lower cost.