23rd Jul 2009 07:00
TGE Marine AG
("TGE", "the Company" or "the Group")
Pre-Close Trading Update
TGE Marine AG (AIM: TGE), a world leader in engineering services for the design and construction of gas carriers and offshore units, provides the following pre-close trading update ahead of announcing its preliminary results for the year ended 30 June 2009 on 23 September 2009.
As announced in its trading update of November 2008, since the second half of 2008 the Company has experienced challenging conditions in its core LPG and Ethylene carrier markets. The continued instability in the global macro-economic environment, together with the dramatic tightening of credit markets, has to the Company's knowledge, resulted in no major contracts for small / medium semi-refrigerated gas carriers being placed during the 12 months ending June 2009.
Nevertheless, given the continued need to replace aging ships, the Group is now seeing increased levels of new build enquiries from clients and expects the market to start to recover during the forthcoming year. The increase in new build interest, combined with the Group's leading position in these core markets and its strong cash reserves, leads the Board to believe that the company is well placed to benefit from a market recovery.
Operational highlights
The Group's preliminary results for the year ended 30 June 2009 are anticipated to be in line with expectations.
TGE is currently working on 21 contracts for smaller and middle-sized ethylene and LPG ships, which are expected to be completed in FY 2010 and 2011.
As announced in the Group's interim results for the 6 months ended 31 December 2008, with the reduction in TGE's order book, the Company has successfully implemented a programme of cost cutting measures, including the short labor scheme funded by the German Government.
These cost cutting measures managed to offset the lower than expected levels of interest received (due to weaker interest rates) during FY 2009. The Company expects that such initiatives to reduce the Group's cost base will lead to overhead reductions of more than 20% for FY 2010 vs. FY 2009.
Management is pleased to announce that on 15 May 2009, TGE delivered the world's first combined small LNG / Ethylene / LPG Carrier.
The Group continues to be well capitalized with substantial free cash reserves and no debt.
Outlook
The economic turmoil of recent months interrupted orders for new build gas carriers, however the renewal process will have to restart and indeed make up for the period of inactivity. With TGE's leading market position, the Board expects to benefit from significant new orders when the market returns.
The strategic drivers for investment in TGE's new markets of small scale LNG and CO2 storage and transportation remain valid in the current economic climate. While projects may be delayed, TGE's diversification into these markets is expected to provide strong new growth opportunities for TGE's longer term business.
The combination of reduced costs, a well capitalized balance sheet, revitalized core markets and diversification into new products gives the Board confidence in the future prospects for the Group.
Results presentation
Following the announcement of the results, an analyst briefing will be held at 09.30 BST on 23 September at the offices of Caledonia Investments, 30 Buckingham Gate, London SW1E 6NN.
Manfred Küver, Chief Executive of TGE, commented:
"The Company remains in robust financial health, despite the effects of the economic environment. The Group has taken timely action to reduce its cost base and is ready to take advantage of the expected up turn in its core markets. We are currently seeing good evidence of improvement in sentiment amongst ship builders and owners".
Enquiries:
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TGE Marine AG |
+49 (0)228 604 480 |
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Dr Manfred Küver |
Chief Executive Officer |
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Steffen Schober |
Chief Financial Officer |
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Singer Capital Markets Limited |
+44 (0)20 3205 7500 |
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Jos Trusted |
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Richard Savage |
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Pelham Public Relations |
+44(0)20 7337 1500 |
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Mark Antelme Henry Lerwill |
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