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08/09/2011Press Releases


“In the second quarter of 2011, we increased our revenues and net income compared to the same period last year as a result of our increased number of vessels, fleet employment strategy and significant exposure to the Handysize segment which has experienced less volatility than that of the other vessel classes. We continued our efforts to provide high quality service to our vessels’ end users and expect that the recent reorganization of our Far East office should further contribute to the efficiency of our operations and offer advantages for further growth in the Asia Pacific region, a region that we believe is of critical significance
for dry bulk shipping.

In the second quarter, we continued to pursue a balanced chartering strategy with a view to maintain a portfolio of both fixed rate and floating rate charter agreements. We expect this to partially protect our cash flows against further market weakness while at the same time it allows us to benefit from future increases in freight rates. In this context, during the second quarter we entered into new fixed rate time charters for two vessels, we extended the employment for another two vessels and we arranged employment for an additional two vessels under floating rate agreements, all with credible and reliable counterparties. Furthermore, our increased exposure to the less volatile Handysize segment helped reduce downward pressure on the daily charter rates earned by our vessels over the first six months of 2011. We believe that our high charter coverage for the next two years should result in high vessel utilization while minimizing the effects of short term freight rate volatility on our cash flows.

As sustained market weakness may lead to lower asset prices and more opportunities for acquisitions at attractive prices, we believe our long-standing relationships with several financiers and well-known charterers, combined with our current and expected liquidity, are likely to allow us to grow our company further.

The first half of 2011 was marked by weak market conditions, as the low charter rates that prevailed during the first quarter of the year carried on into the second quarter.

The expectations of increased deliveries of large bulk carriers have had, in our opinion, a highly detrimental impact on charter rates in 2011. This is evident by the fact that during the second quarter, low spot rates resulted from factors including a slight decline in growth in demand for dry bulk transportation stemming from slower economic activity and increased economic uncertainty in many parts of the world. In the coming months, we anticipate some tightening of the market, as iron ore inventories in China are expected to
deplete and Australian and Japanese industrial production are expected to rebound from their respective setbacks. We believe that this will result in rate spikes, which are not expected to be of a long duration but will offer some relief.

On a brighter note, scrapping of older and obsolete tonnage has picked up significantly in 2011. According to industry sources, more than 50 Capesize vessels headed to the scrap yard so far this year, as compared to around six in the same period last year. Also encouraging is the similar scrapping activity observed by industry sources in the Panamax sector. We believe that continued lower freight rates will reinforce this trend.

We anticipate that the following months are going to be characterized by volatile conditions, as there are a multitude of factors that can affect the market, which are hard to predict. Looking beyond short term uncertainty however, it is our firm belief that we have proved our ability to deal with unfavorable market fundamentals, and we believe we are poised to benefit from any future recovery in dry bulk shipping and continue our growth.”
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