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Shipping market is facing continuous oversupply of tonnage says Mercantile Shipping chairman

September, 11, 2019

The shipping market dynamics have changed through international trade disturbances such as the trade war between USA and China, the sanctions against Iran, the uncertainty regarding Brexit, Mercantile Shipping Company PLC chairman H. A. R. K Wickrematileka said.

“Shipping market is facing a continuous oversupply of tonnage. At the same time, we see a concentration process on the charterers side through bankruptcies, mergers and acquisitions reducing the number of charterers. Whilst we have a very good reputation of managing our vessels efficiently with low operational costs and moderate overheads, we cannot win the battle on the cost side. The year was also crucial for our shipping operation as the Norddeutsche Landesbank changed their policy and now wants to dispose of their ship financing portfolio,” Wickrematileka told shareholders in the annual report 2018/2019.

In the year 2018/2019 the Group made a net loss of approximately RS.1,060 Million after tax, compared to a net loss of Rs.372 Million last year, whilst Mercantile Shipping Company PLC showed a net profit after tax of Rs.3.7 Million in comparison to a net profit of Rs. 4.2 Million after tax last year.

Mercantile Emerald Shipping (Pvt) Ltd on the other hand has made a loss of Rs. 790 Million which is not relevant to Mercantile Shipping Company PLC at this stage.

However, the company is looking foward for a better future in the coming years.

“The share price which has dropped to a level of Rs.45 is expected to improve,” Wickrematileka said.

“With the local and international ship owning industry being very much on the decline, the Company will explore areas of investment to secure future business, where it could use its link into Germany to develop new business ideas in the growing service industry,” Wickrematileka added.