Higher utilisation and charter rates for inland towage and coastal transportation tugs has boosted Kirby Corp’s revenues and earnings in Q2 2019
An upturn in inland and coastal transportation markets in North America helped drive up Kirby Corp’s net earnings 65% to US$47.3M in Q2 2019, compared with US$28.6M in Q2 2018.
This is despite longer than anticipated delays in barge transportation along stretches of the Mississippi River and Houston Ship Channel and ongoing fleet investment.
Kirby’s revenues from marine transportation in Q2 2019 were up 7% to US$404M compared with US$378M in the same period a year ago. Its operating income was US$53.2M in Q2 2019, up 39% from US$38.2M in Q2 2018.
Higher revenues and income were due to rising profits from inland and coastal tug and barge operations, said Kirby president and chief executive David Grzebinski.
“Our marine transportation business significantly improved its profitability despite challenging inland operating conditions,” he said.
“Inland marine’s operating income improved significantly, but was somewhat tempered by continued near-record high water conditions on the Mississippi River System, significant lock maintenance projects, and extended delays in the Houston Ship Channel,” said Mr Grzebinski. “Overall, these issues contributed to nearly double the delay days year-over-year.”
Kirby’s earnings were positively affected by improvements in utilisation and charter prices for coastal marine transportation. “Market conditions continue to improve,” said Mr Grzebinski. “During the quarter, barge utilisation rates increased into the mid-80% range, and we renewed term contracts higher.
“These improvements, together with reduced sequential shipyard maintenance, resulted in a slightly positive operating margin for the quarter.”
Kirby operates an inland fleet of 309 towing vessels and 1,060 barges in North America. It also operates 47 towing vessels and 49 barges for coastal and offshore towage. Many of these operate as articulated tug-barge (ATB) units along the North American western and eastern coasts from Alaska to California, around the US Gulf and up to New England and eastern Canada.
Kirby is investing in new towboats and ATB tugs, while refitting and upgrading older vessels. It spent US$66.3M during Q2 2019 on newbuildings and upgrades. This included $45.6M on retrofits to existing inland and coastal fleets, US$8.4M for new inland towboat construction, US$5M on three new coastal ATB tugboats and US$7.4M on projects in its distribution and services division.
Kirby transports petrochemical feedstocks, black oil, pressurised products, chemicals, and refined products on inland barges. A unit tow on the canal typically consists of 1-3 barges pushed by a towboat. A river unit tow includes 2-6 barges pushed by a towboat.
Coastal services involve an ATB transporting refined products and black oils on barges around North American coasts. Kirby also has several double-hulled tank barges for transporting heavy fuel oil and refined products in Hawaii.
Smart tug design, construction and operations will be discussed Riviera’s Smart Tug Operations Conference in Singapore in September