Pakistan Credit Rating Agency Limited maintains entity ratings of Pakistan National Shipping Corporation

Lahore, February 16, 2016 (PPI-OT): PACRA has maintained the long term and short-term entity ratings of Pakistan National Shipping Corporation (PNSC) at ‘AA-‘ (Double A Minus) and ‘A1+’ (A One Plus), respectively. These ratings denote very strong capacity for timely payments of financial commitments.

The ratings reflect PNSC’s strong ownership – majority owned by Government of Pakistan – and its strategic significance as the country’s flag carrier. Despite subdued dynamics of global shipping industry, the Corporation sustained its topline on the back of long-term customer contracts. Settlement of disagreement with one of the key customers, PSO, is important – negotiations are underway.

PNSC continues with the plan to rehabilitate its fleet. Key objectives are, i) reduction in direct expenses; maintenance cost of newly added vessels is low and ii) substitution of business handled through low-margin charter-hire arrangements with owned vessels. The company’s financial profile is stretched as these initiatives are majorly debt financed, resulting in relatively low coverages.

However, the management’s continuing focus to increase the share of high margin business is likely to generate commensurate cash flows. This, coupled with on-balance sheet liquidity, supports overall risk profile of the company. The ratings are dependent on the Corporation’s ability to sustain its business profile. At the same time, proactive management of financial obligations while improving coverages remains important.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com