GE Shipping's Near-Term Performance To Be Affected By Sluggish Market Conditions, Says CFO

The market scenario, which is currently sluggish due to multiple factors, including geopolitical tensions, is likely to impact the near-term performance of Great Eastern Shipping Co., according to the company’s Executive Director and Chief Financial Officer G Shivakumar.

GE Shipping Company’s revenue for the quarter ended September 2024 increased 10.2% year-on-year to Rs 1,354.4 crore from Rs 1,229 crore. Net profit jumped 29% to Rs 71.37 crore, as against Rs 55.26 crore in the same quarter a year ago.

Talking to NDTV Profit about the company’s performance in the upcoming quarters, Shivakumar said it was likely to get impacted until the winter season threw up favourable results. The winter season, according to Shivakumar, was a stronger quarter for the commodity space and, hence, they were hopeful of a positive outcome.

“A very large part of our capacity, the tanker capacity, is exposed to the spot markets, which is spot freight rates. And if we have weak freight markets, it will certainly affect us financially,” he said.

While crude freight rates are not too weak at the moment, product tanker freight rates have been under pressure, according to the GE Shipping Company CFO.

“Crude freight rates are probably around the $30,000 to $35,000 a day level, which is not too weak. But, in comparison with last year, they're a little weaker,” the top executive explained.

“Product tanker freight rates have been struggling in recent months. Probably around the $10,000 to $20,000 a day range, while they were in the $30,000-ish range a year ago. That's a little weaker than it used to be. So that could affect (our performance),” he added.

Talking about commodity demand in India, Shivakumar said it was steady and growing.

“We have been seeing coal demand, coal imports grow year on year. So, from that point of view, I think we are fine on the demand side,” he said.

However, weak global oil demand has come as a surprise for the industry, he noted. 

“One of the surprising observations has been global oil demand, which has been fairly weak. We were expecting 1.2 to 1.5 million barrels a day for the year growth, and it's been pretty weak,” the CFO said.

“A large part of that is contributed by China, which has had very poor oil demand growth, and probably negative oil demand growth, actually, year to date. So that's a bit of a concern for us,” he added.

Shares of Great Eastern Shipping Company fell 3.7% during intraday trade to touch a low of Rs 1,071.05 apiece on the NSE on Monday. However, the stock recovered some early losses to trade 3.23% lower at Rs 1,076.2 apiece on the NSE, compared to a 0.11% drop in the benchmark Nifty level of 23,508.8 at 12:40 p.m.