JSC  Latvijas  kuģniecība  (Latvian  Shipping  Company  -  LASCO) today

announced  its  financial  results  for  the  first half of 2004. LASCO

Group's  profit  after tax for the first six months ended June 30, 2004

reached  $  5.4 million, which is an increase of $ 3.7 million compared

to the budget. 



The  above-mentioned  result  was achieved mainly due to the successful

LASCO   fleet   performance  that  was  positively  influenced  by  the

relatively  high  freight  rates  and  stable  demand prevailing in the

shipping  market  in early 2004. With the onset of summer, however, the

demand  for  oil products decreased leading to the reduction of freight

rates.  The  situation  was  further  aggravated  by  the  unfavourable

prospects for the employment of LASCO 's older tonnage, whose technical

condition does not comply with EU regulations. Due to the factors above

the  Group's  vessel  operating profit for the first half of 2004 was $

13.1  million,  which  is  half  as much as in the respective period of

2003.



"Considering  slow-down  of the global economy, steadily growing prices

for   oil  products,  traditionally  high  order  books  at  the  world

shipyards,  as well as tightened regulations for oil transportation and

other  circumstances  influencing the situation in the shipping market,

there  are  no  grounds to believe that relatively high current freight

rates  will  persist  in  the  long-term  perspective. Since charterers

prefer  modern, reliable and safe tonnage, any eventual decrease in the

demand  for  maritime  transportation  services will in the first place

affect  the  oldest part of LASCO fleet. Only further implementation of

the  Fleet  Renewal  Programme  will  enable  the  Group to develop and

preserve  its  market  share  in the middle-range tanker segment of the

shipping  industry. Furthermore, it is economically sounder to maintain

a  younger and smaller tonnage, than an older but a larger fleet", said

Imants Vikmanis, LASCO President.



As  at  the end of the first six months 2004 LSC Tanker Fleet consisted

of  33  product  tankers,  which  were  mainly  employed either on time

charter  or  in  the  spot  market. LSC Tanker Fleet's vessel operating

profit  for  the first half of 2004 has decreased threefold compared to

the  respective  period  of  2003.  Such  a deterioration of the Tanker

Fleet's  result  was  caused  mainly  by considerably lower average TCE

(Time  Charter  Equivalent)  rates  in  the  tanker market - those were

unprecedentedly  high  in  the  first  half  of  2003.  Besides, in the

previous  year  the  employment  prospects for single-hull tankers were

more favourable compared to 2004.



LASCO  Reefer Fleet, consisting of five ice-classed reefer vessels, was

traditionally  employed in carrying fruit and other frozen cargoes from

the  Southern  Hemisphere  to Northern Europe. Despite the fact that at

the  beginning of the year freight rates in the given sector were lower

compared  to 2003, Reefer Fleet's vessel operating profit for the first

half  of  2004 exceeded the respective result of the previous year by $

0.6 million.



During  the period LSC 's both LPG carriers continued to be employed by

ScandiGas  Pool  ,  and their vessel operating profit for the first six

months of 2004 exceeded first half 2003 profit by $ 1 million.



Decrease  in  the demand for liner transportation (caused by changes in

the  Customs  Transit Procedures upon Latvia's accession in EU) and m/v

Juris  Avots  planned  dry  dock  repairs were the main reasons for the

lower,  compared  to  2003,  first  half 2004 result of LASCO Dry Cargo

Fleet.



Following  the  practice  commenced  in late 2003, LASCO vessels Rīg a,

Kurzeme  ,  Vidzeme , Latgale and Juris Avots were reflagged during the

first half of 2004 and are now flying Latvian flag. Subject to positive

reflagging  experience  also  other  LSC  vessels  are  planned  to  be

transferred to Latvian Ship Register and fly Latvian flag.



As  at  June  30,  2004  LASCO  Group's  fleet  consisted of 33 product

tankers,  2  LPG  carriers,  5 reefer vessels and 1 Ro-Ro/general cargo

vessel.



JSC  "Latvijas kuģniecība" non-audited financial report for 6 months of

2004 available here: <a href='http://www.rfb.lv' target='_blank'>http://www.rfb.lv</a>

/public/vertspapiri/39262.html?language=2 



Marita Ozolina-Tumanovska

Head of PR Departament

Phone: +371 7020120, 9287169

Fax: +371 7820239

e-mail : ozolina@lsc.riga