AGL Resources said its Tropical Shipping operation had earnings before interest and taxes (EBIT) of $2 million in the third quarter compared to a loss of $1 million in the same period a year earlier.
In the first nine months, EBIT was $3 million compared to a $1 million loss in the first nine months of 2012.
The EBIT improvements for the quarterly and nine-month periods of 2013 were driven by 7 percent and 10 percent increases in TEU volumes, respectively, said AGL, as well as lower depreciation and amortization expenses.
“Year-to-date, these improvements were offset by lower rates and increased operating and maintenance expenses associated with higher TEUs. Due to the seasonal nature of the business, substantially all of the operating income for the cargo shipping segment is expected in the fourth quarter," the company said.
AGL noted that “Tropical Shipping’s objective is to reduce its exposure to higher fuel costs through fuel surcharges. However, these fuel surcharges do not remove our entire risk in periods of increasing fuel prices and volatility, or increased competition, and any relief may not be realized in the same period as the cost incurred. An increase of 10 percent in Tropical Shipping’s average cost per gallon for vessel fuel results in approximately $5 million in additional annual fuel expense.”