Algoma Central Corporation reports revenues for the quarter ended June 30, 2015 of $132.8 million, compared to $138.3 million for the same period in 2014. Net earnings were $23.3 million, compared to $14.9 million during the same period a year earlier. The decrease in revenue was incurred mainly in the Product Tankers segment due to reduced customer demand. In addition, revenues for both Domestic Dry-Bulk and Product Tankers reflect the impact of lower fuel prices compared to 2014. Revenues in the other business units for the 2015 second quarter remained at approximately the same levels as the comparable 2014 period.
Revenues for the six months ended June 30, 2015 of $184.4 million were $5.6 million lower than for the same period in the prior year. Net earnings of $0.3 million were reported, compared to a loss of $6.9 million during the same period a year earlier. Domestic Dry-Bulk revenues increased by $4.3 million and Real Estate revenues increased by $0.9 million. The Product Tanker segment experienced a decrease of $6.6 million and the Ocean Shipping segment suffered a decrease of $5.6 million.
Net earnings for the 2015 second quarter and six months reflect a one-time gain on the cancellation of shipbuilding contracts of $10.2 million. Excluding this gain from the 2015 results, net earnings for the second quarter would have been $13.1 million compared to net earnings of $14.9 million for the 2014 second quarter, and for the six month period, the 2015 net loss would have been $9.9 million compared to a net loss of $6.9 million for the same period in the prior year.
Equinox Class Fleet Renewal
The Company entered into contracts in 2010 with Nantong Mingde Heavy Industry Co., Ltd. (“Mingde” or the “Shipyard”) in China to construct a total of six Equinox Class dry-bulk vessels, continuing the fleet renewal initiative begun with the arrival of the Radcliffe R Latimer in 2009 and the Algoma Mariner in 2011. By June 2014, the Company had taken delivery of two bulkers, Algoma Equinox and Algoma Harvester. The remaining four vessels, all self-unloaders, were expected to be delivered in 2015 and 2016.
On December 26, 2014, Mingde entered a court supervised restructuring process. During the second quarter of 2015, after consultation with counsel and meeting with the restructuring administrator of the Shipyard, Algoma concluded it is unlikely the restructuring process is going to succeed and therefore advised the Shipyard it no longer intended to take delivery of the four vessels.
While delayed, the overall fleet renewal program, of which these Equinox Class ships were a part, remains a priority for the company. In addition to contracts signed in April with a subsidiary of Uljanik d.d. of Croatia, for the construction of two new Equinox Class 650 foot self-unloading dry bulk carriers, Algoma is currently in negotiation with shipyards for a total a five Equinox Class 740’ self-unloaders in place of the four cancelled vessels that were to be built by Mingde. Management expects the two 650’ Equinox self-unloaders to be delivered in 2017 and is targeting late 2017 through 2018 for delivery of the five 740’ Equinox self-unloaders.