Profits for the year were $9.25 million or 8% above the previous record results of $8.57 million in 1997. Since inception in late 1993, MIF has achieved record levels of Net Income from Operations in each successive year.
Earnings per share also grew reaching a new high of $0.92 versus $0.88 per share in 1997 (adjusted for the distribution of 2.2% in bonus shares in June 1998).
In addition to the excellent financial results, other highlights of 1998 included expansion of the fleet, arrangement of a major debt financing and further advances in effective cost containment.
The fleet expanded via the acquisition of three new buildings including two 107,000 DWT Aframaxs built by Imabari and a 304,000 DWT VLCC built by Hyundai. The year-end fleet of fifteen tankers had an aggregate dead-weight tonnage of 1,317,000. Later this month MIF will take delivery of an additional 107,000 DWT Aframax built by Imabari, bringing the fleet to sixteen tankers with DWT of over 1,420,000 with an average tonnage age of 6.7 years.
MIF consolidated its past debt through a $250 million syndicated loan with a group of 15 leading shipping-oriented commercial banks.
Effective cost containment contributed to the excellent profit results. Net revenues on a time charter basis rose $ 12.43 million or 24%, while combined operating and G & A expenses increased $2.72 million or 14%. As a result income from operations expanded $9.71 million or 31%. Reflecting the major expansion of the fleet, net interest costs and depreciation were significantly higher. However, as noted earlier, on an overall basis net income grew by a gratifying $0.68 million or 8%.
Looking forward, MIF enjoys two key strategic strengths. These are a young and modern fleet as well as disciplined expense management. These characteristics enable management to concentrate on longer-term employment opportunities with first-rate charterers. As noted in the past, the tanker industry has become increasingly burdened by a hostile economic environment, which in turn has translated into depressed charter rates and sharply reduced revenues for the industry. The prospects for the tanker market remain under this cloud for 1999.
MIF's policy, which emphasizes longer-term employment, buffered revenues and profits in 1998. A number of charters have or will expire in 1999, presenting a significant challenge. At present, seven of the vessels are operating with fixed employment through the end of 1999 or beyond. Consistent with the company's policy, management is actively pursuing opportunities for longer-term contracts with acceptable rates and conditions.
MIF is a lost cost provider of quality service. The present environment places a premium on this skill and discipline. Growth of MIF's fleet, coupled with the benefits of scale provided by its commercial and technical managers, Tsakos Shipping and Trading S.A., has been an important element in containing costs. Nevertheless, management is earnestly pursuing further means of minimizing costs within the constant framework of safe, reliable quality service and efficient preventive maintenance of its vessels.
Management plans to issue its 1998 Annual Report next month and to hold its Annual General Meeting of Shareowners on Friday, 28th May at its offices in Athens Greece.