QUOTE AND NEWS
The Hindu Business Line  Nov 8  Comment 
GMR Airports has signed an agreement with the Government of Goa for the development and operation of north Goa’s greenfield international airport at Mopa. The agreement was signed by RV Sheshan, C...
The Hindu Business Line  Nov 6  Comment 
GMR Energy plans to reduce its debt by ₹ 2,000 crore by using the proceeds from its 30 per cent stake sale to Tenaga Nasional Berhad (TNB) of Malaysian, a senior company official said.Last week, GMR ...
The Hindu Business Line  Nov 4  Comment 
GMR aims to reduce its corporate debt through this divestment, attract foreign capital, both equity and debt
The Hindu Business Line  Oct 28  Comment 
GMR Airports Limited (GAL), a subsidiary of GMR infrastructure Limited, along with its partner GEK Terna Group of Greece, has submitted a bid for the development, operations and management of New Int...
The Economic Times  Oct 27  Comment 
The last date of submitting the bids was today. It has been extended several times since February.
The Economic Times  Oct 27  Comment 
GMR Infrastructure, which owned GMR Male International Airport (GMIAL), said the arbitration award was given by a three-member international arbitral tribunal.
The Economic Times  Oct 21  Comment 
In phase I, the railways has lined up eight stations across the country to be redeveloped and the bidding process for two stations in Delhi and NCR region has already been rolled out.
The Hindu Business Line  Oct 21  Comment 
Delhi International Airport Private Limited, a subsidiary of GMR Airports Ltd. and GMR Infrastructure Limited, has priced $ 522.6 million in the international bond market. DIAL entered into a Purch...
The Economic Times  Oct 10  Comment 
The stock ended the day with a gain of 2.53 per cent at Rs 42.55 on BSE. During the day, it surged 3.37 per cent to Rs 42.90.
The Hindu Business Line  Oct 7  Comment 
Following its announcement on July 1, Adani Transmission (ATL) has completed the acquisition of 74 per cent operational transmission assets (shares) of Maru Transmission Service Company (MTSCL) and 4...




 
TOP CONTRIBUTORS

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
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki