The managing director of Thailand's largest dry bulk carrier has said that recent letter of credit (L/C) shortages have contributed to trading conditions under which Thoresen Thai Agencies Plc (TTA) has seen its first quarter profits all but wiped out.

Despite difficult trading conditions, Chandchutha Chandratat is nevertheless optimistic that the business outlook for TTA is improving.

Profit collapse

TTA's net profit slumped by 95 per cent from 2.1 billion baht in the first quarter of 2008 to just 99 million baht in the three months to March 2009.

Comparing the same two periods, the bulk carrier's total revenue almost halved to 4.42 billion baht from 8.1 billion baht.

L/C impact

Around 70 per cent of TTA's first quarter income derived from revenue from shipping, which in turn earns much of its income from transporting commodities.

According to Chandratat, the credit crunch made it difficult to open L/Cs, which had "severely affected spot trading of many commodities, such as grains, soybeans, sugar, and cement," he says.

Optimism

The TTA managing director also blamed oversupply in the shipping sector for squeezing margins. "New supplies of vessels entered the market steadily while demands for trade remained low," he says.

Chandratat reckons shipping rates will stabilise during the rest of 2009 as a result of stimulus packages being implemented by governments globally.

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