QUOTE AND NEWS
The Hindu Business Line  9 hrs ago  Comment 
GMR Infrastructure today said its Rs 1,400-crore rights issue will open on March 24. “The Management Committee of the board of directors of the company has approved and adopted the Letter...
The Times of India  Mar 3  Comment 
Jindal Steel & Power, Adani Power, JSW Energy, GMR Energy, Hindalco Industries, Reliance Cement and Jaiprakash Associates are among 45-odd firms that have technically qualified to 11 non-operational coal mines being bid out by the government in...
The Hindu Business Line  Mar 2  Comment 
GMR Infrastructure Ltd plans to raise Rs 1,400 crore through issue of equity shares on a rights basis. The company in a regulatory filing has informed BSE that the board of directors on F...
OilVoice  Feb 25  Comment 
General Maritime Corporation and Navig8 Crude Tankers Inc. NOTC BLUE today announced that they have entered into a definitive agreement to create Gener8 Maritime Inc. a worldclass provider of in
The Economic Times  Feb 25  Comment 
The group has earmarked 300 acres of the 10,000-acre SEZ exclusively for toy-makers -both soft and plastic -from India as well as abroad.
The Economic Times  Feb 23  Comment 
"The operative word is selectively for the simple reason that the hero’s of the yester years the IVRCL, GMR, GVK, I do not think are in a position to revive themselves."
The Hindu Business Line  Feb 23  Comment 
GMR Infrastructure Ltd has informed the BSE that Delhi International Airport (P) Ltd (DIAL), its subsidiary, has entered into an agreement to sell its entire 26 per cent stake of the equity capita...
The Times of India  Feb 14  Comment 
Reliance Cement won the Sial Ghogri mine at Chhindwara in Madhya Pradesh quoting a price of Rs 1,402 per tonne. GMR Chattisgarh won the Talabira-1 mine in Odisha’s Sambalpur district quoting a price of Rs 478 per tonne.
The Economic Times  Feb 14  Comment 
The company has interests in Airports, Energy,Highways and Urban Infrastructure sectors. It has 15 Power generation plants of which 8 are operational and 7 are under various stages of development.
The Hindu Business Line  Feb 14  Comment 
Anil Ambani Group's Reliance Cement and GMR Group won the two blocks on offer on the first day of coal auctions. Reliance Cement won the first coal block after it emerged as the highest b...




 
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General Maritime Corporation (NYSE: GMR) is a tanker company that ships crude oil and petroleum products. The company has fewer ships than many of its competitors, but attempts to offset this disadvantage by focusing exclusively on the mid-size (80,000-200,000 deadweight tonnes) tanker market. Its singular focus on one market segment allows it to compete more effectively with larger companies-- most of which operate in several markets-- in terms of scale. For instance, GMR had 31 mid-size tankers in its operating fleet at the end of February, 2010.[1] Although Overseas Shipholding Group, the company's primary competitor, has 4 times as many ships, it only fewer midsized tankers.

The number of tankers and the overall tonnage available to transport crude oil has grown faster than world oil demand. Rates for an Aframax tanker, a common type of mid-sized tanker, decline significantly when there is an oversupply of ships. GMR, which generates approximately 75% of its revenues from short-term or spot contracts, is significantly affected when this occurs.

Company Overview

The company has been able to modernize its fleet since 2005 by aggressively selling its non-double-hull vessels. Single-hulled tankers are not as safe and will be phased out by 2026, in accordance with the 1973 International Convention for the Prevention of Pollution from Ships. Since then, the company's safety record has been a strong selling point to potential charterers.[2]

GMR's fleet of double hulled ships is well suited to do business in the Atlantic Basin because of the stricter environmental regulations. As a result, the company transports a lot of oil to the United States, the world's leading importer of crude oil. .[3]

Business Financials

In 2009, total revenues for GMR were $350 million, an increase from the previous year's revenues of $326 million.[4] However, its net income actually declined between 2008 and 2009. In 2009, GMR posted a net loss of $12 million, compared to its net income of $30 million in 2008.[4] This loss was largely due to an impairment charge on its goodwill of $40 million in 2009.

Trends and Forces

Exchange rates mean higher expenses and lower real revenue

Because the functional currency of the international tanker industry is the U.S. Dollar, the depreciation of the dollar means less real revenue for GMR. Moreover, GMR's revenues and operating costs are in U.S. Dollars, while some operating expenses and overhead costs are in other currencies like the British Pound, Japanese Yen, Singapore Dollar, Australian Dollar, and Norwegian Kroners. To combat the weakening dollar, the company has in the past entered into forward contracts to acquire Euros for Dollars[5], but this practice has proven unsustainable in the face of a consistently changing rates.

World tanker supply is growing faster than tanker demand

Too many tankers mean that GMR will have to lower its charter rates. While GMR hedges against such risks by employing many of its ships on long-term, fixed-rate charters, it nevertheless earns most of its revenues from spot market charters whose rates have historically been tied to the supply and demand balance for carrying capacity.[6]

On the other hand, GMR may also be poised to take advantage of a shift in the supply-demand balance for tankers. The company has many fewer ships than its competitors[7] and also has one of the lowest fleet carrying capacities among the large tanker companies (see below). Since tanker values drop in periods of oversupply, GMR could benefit from the opportunity to buy tankers cheaply.

Competitors

Some of GMR's major competitors include:

  • Frontline, a crude oil shipping company that operates 83 vessels worldwide and has a total tonnage of approximately 19.35 million dwt.[8][9].
  • Overseas Shipholding Group, a U.S. based tanker company that transports crude oil, petroleum product, and liquefied natural gas internationally. Domestically, they also operate a U.S. Flagged fleet[10][11].
  • Teekay Corporation provides international transportation for crude oil and petroleum products, and operates approximately evenly in the charter and spot markets. They have a total capacity of 4.2 million dwt[12][13].
  • Tsakos Energy Navigation is a Bermuda-based tanker company that maintains a fleet that is diverse and largely capable of traveling through icy waters.[14]

General Maritime Corporation pursues a strategy of utilizing only mid-size Aframax and Suezmax vessels while other competitors focus on larger carriers (like FRO) or a mixture of carriers (like OSG or TNP). While they are a smaller tanker company, they thrive on the relationships they've built with their customers.

  1. GMR 10-K 2009 Item 1 Pg. 2
  2. GMR Business Strategy
  3. GMR Tanker Industry Overview
  4. 4.0 4.1 GMR 10-K 2009 Item 6 Pg. 35
  5. GMR 2006 Annual Report, Page 38
  6. MarketWatch article on Oil-Tanker stocks
  7. Google Finance: GMR Overview
  8. FRO 2006 10-K, page 26
  9. Frontline website
  10. OSG 2006 10-K, Page 9
  11. Overseas Shipholding Group Inc
  12. TK 2006 10-K, Page 17
  13. Teekay Corporation
  14. Tsakos Energy Navigation Ltd
  15. Tidewater Inc website
  16. Horizon Lines Inc website
  17. Aegean Marine Petroleum Network Inc website
  18. Alexander & Baldwin Inc website
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