Nov 18, 2010

Nov 18, 2010

Shipping Companies Financial Performance Measurement using Industry Key Performance Indicators. Case Study: The highly volatile period 2007-2010

by Dimitrios Lyridis

On November 18, 2010, the Greek  Sections  second  monthly technical meeting of the 2010-2011 season, was held  at the Auditorium of Maran Tankers  Inc.(kind offer of the owners). In October, 2010 there was no technical meeting as we organised the SNAMEs 3rd International Symposium on Ship Operations,Management & Economics ( SOME ) (now an institution in Greece).

The meeting was attended by approximately 30 members and 20 visitors from the shipping community.

Ms Maro Varvate, Managing Director of OceanFinance Ltd. presented the subject topic. The scope of the presentation was to demonstrate the development of a financial performance measurement tool for shipping companies based on corporate valuation as it derives from a critical view of their financial statements. Key Performance Indicators (KPIs) essential when making business and investment decisions, were proposed and applied.

The analysis focused on those KPIs that concern the pillars of shipping financial management; that is Liquidity, Fleet Management, Debt Management, Profitability and Market Value. Subsequently, it was explained how each of these interacts with a companys free cash flow and how a basis for an effective risk management strategy can thus be established. Industry trends, based on average figures of selected peer-group, presenting their financial position over time were shown.

The results can be of value basically to managers who seek to control and improve their companys performance identifying its fundamental strengths and weaknesses in comparison with to its business environment; to shipping analysts, including bank officers and private equity holders, who use them to assess the ability of their existing and potential clients to pay back their debts; and to stock analysts and investors who are interested in identifying the companies with increased efficiency, low risk, and high growth prospects. 

After this presentation of significant current interest, the Vice Chair John Kokarakis presented SNAMEs certificates of appreciation to International VP Stavros Hatzigrigoris and to Chair Petros Lalangas for their loyalty, support and contributions to the Greek Section and then a reception was held at an adjacent hall at Maran Tankers, Inc. at which time a cake was cut with congratulations to Stavros & Petros. Of particular quality was the traditional "tsikoudia" hard drink brought over for this special occasion from Crete by Dimitrios Economou, our Exec Com. Member.

The presentation can be found here