25 May 2012

Baltic Oil back on form

02/02/2012 Miles Nolan

Shares in oil transhipment outfit Baltic Oil Terminals (BTC) have charged ahead 15 per cent today, on the back of a positive AGM statement.

Last year was one to forget for the AIM company, as it battled against the impact of a disgruntled employee in Russia and the impact of destroyed records on its business in Kaliningrad. A thorough audit took place, which led to duplicate invoices being prepared and a much tighter control of systems - but Baltic is now much stronger.

The integration of Rotterdam based Petro Broker International has gone well, with the benefit of past cost savings starting to benefit the bottom line. All its tanks are fully let, and the increase in the cost of fuel oil and bunker fuel seen in recent weeks is expected to have a positive impact on rates.

Late last year Baltic acquired Danish terminals business Haahr Tank-Lager, which brought with it a 160,000 cubic meter terminal. It has been re-named Dan Balt and will take six months to integrate, but Baltic argues it is already profitable and should deliver even more upside from the third quarter of 2012, following a shift from storage to transhipment.

Interim results to June revealed a dip in sales to £6 million (2010: £7.6 million) but pre-tax profits increased 3 per cent to £2.86 million - there was also a hefty cash balance as at December 2011 of £3 million.

Baltic argues its operations in Kaliningrad have stabilised and it has boosted its management team with two recent appointments. A broker note is long overdue, but at the last estimate pre-tax profits of £6.65 million (EPS of 5.7p) were in prospect for 2012.

Management have worked hard to sort a number of issues out, so the market is starting to take a closer look at its lowly valuation of just £20 million. Cash generative, and with recent director buying, there is also scope for Baltic to start paying a dividend. At 21.25p, the shares are a buy.

Tags: AIM market, Good market position, Profitable, Simon Escott, Turnaround

Sector: Industrial Transportation

Companies: Baltic Oil Terminals

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