ATHENS, GREECE, November 12, 2008 – Diana Shipping Inc. (NYSE: DSX), a global shipping company specializing in the transportation of dry bulk cargoes, today reported net income of $57.6 million for the third quarter of 2008. This compared to net income of $50.4 million reported in the third quarter of 2007.
Voyage and time charter revenues were $87.4 million for the third quarter of 2008, compared to $49.1 million for the same period of 2007, due to an increase in prevailing time charter rates and the increase in operating days due to the enlargement of the Company’s fleet.
Net income for the nine months ended September 30, 2008 amounted to $167.5 million, compared to net income of $97.8 million for the same period of 2007. Voyage and time charter revenues were $253.1 million for the first nine months of 2008, compared to $131.6 million for the same period of 2007.
Dividend Declaration and Change in Future Dividend Policy
The Company has declared a cash dividend on its common stock of $0.95 per share, based on its results of operations during the third quarter ended September 30, 2008. The cash dividend will be payable on or about December 11, 2008 to shareholders of record as of November 26, 2008. The Company has 75.1 million shares of common stock outstanding.
In order to position the Company to take advantage of market opportunities, the Board of Directors has decided to suspend the Company’s future dividend payments after the dividend distribution noted above. The Board believes this decision will enhance the Company’s financial flexibility, by permitting cash flow that would have been devoted to dividends to be used for opportunities that may arise in the current marketplace.
Initiation of Stock Buyback Plan
The Company has further announced that the Board of Directors has authorized a share buyback program for up to US $100 million of the Company’s common shares during the period ending December 31, 2009.
Chairman and Chief Executive Officer’s Comments
Simeon Palios, Chairman and CEO of Diana Shipping, said: “Our consistent strategy at Diana Shipping has been to maximize returns to shareholders taking into account the highly cyclical nature of the dry bulk shipping industry. We have delivered on our strategy. Since we went public in 2005, Diana Shipping Inc. has produced a total annualized rate of return to shareholders of more than 27%. This performance compares very favorably to that of the other drybulk shares, as well as to that of the S&P 500 over the same period. We produced this return during a period of high vessel prices and high charter rates by employing low debt levels and a full dividend payout policy to create a modern fleet.
“We believe we are now entering a period of low charter rates and vessel prices which creates different opportunities to help us produce maximum returns. A suspension of our dividend will enable us to apply our cash flow to these opportunities when we believe we can create long-term value for shareholders.
“Low markets create opportunities. In 1999, we ordered the construction of the Nirefs and three other Panamax vessels currently in our fleet for a contract price of $20 million each, using 75% debt financing. While past performance is not indicative of future results, as you can imagine, our results from the Nirefs and its sister ships have been very good. While we are paying our full dividend for the third quarter, we are suspending future dividends during this period of changed, but enhanced opportunity.
“Our Company has one of the lowest debt levels in the drybulk shipping industry. By enhancing our liquidity resources while maintaining our relatively low level of debt, we are preparing ourselves to take advantage of investment opportunities, which will present themselves during this downturn. We have accepted slightly lower rates in order to do business with creditworthy charterers. We have a young fleet ready to meet a change in the market as the downturn ends. In addition, we believe that the present credit crunch will create new market opportunities as there are fewer buyers and lower vessel prices, but also fewer new ships delivered from the shipyards due to financing constraints.
“When market conditions and opportunities change, with our low debt level and by enhancing our liquidity, we will then have the flexibility to support more debt and reinstate our dividend. Management and Board members own over 19% of the shares of Diana and we care about shareholder value.”…