Bermuda Container Line Ltd.'s (BCL) president Geoffrey Frith admitted he is concerned about his company's operational earnings, despite posting record profits for last year.

BCL reported net earnings of $6 million in the fiscal year 2007, an increase of $1.6 million from 2006, but nearly all of the increase came from a one-off item; the gain on the sale of a non-operating subsidiary company.

Earnings from regular operations at $4.4 million were up only $28,000 over 2006 and included in this was investment income which grew by $128,500 or 12 percent, in 2007. Net earnings generated by the shipping operations were down $100,000 over the previous year.

Earnings of the BCL service between New Jersey and Bermuda were down 18 percent in 2007 and this was primarily caused by cost increases. Cargo volume was soft last year with a small decline over 2006. But the big impact on the BCL service earnings was higher vessel operating costs. These were negatively impacted by problems encountered with the regular dry-docking of the Oleander in the Spring of 2007 but all shipping lines are feeling the pressure of increasing crew costs.

And Mr. Frith agreed that the big rise in net earnings was mainly due to the sale of the company's subsidiary, whereas shipping operations actually experienced a decline in net earnings.

"Even though the bottom line looks healthy, I think it is fair to say that we are concerned that the actual operations had a decline," he said.

"Delays in the Oleander dry-docking and an increase in costs above and beyond budget contributed to that.

"We are experiencing cost pressures and the whole operating costs are experiencing pressure, with a high demand in the shipping industry and a shortage of crew pushing up costs.

"There is also a cost pressure on the fuel side with surging fuel prices.

"So, even though it is a record profit because of the sale, I do have some concerns regarding the earnings and we will have to work hard to improve on the base earnings going forward in the future."

At the board meeting held yesterday the directors declared a dividend for the second quarter of 2008 in the amount of 14 cents per share payable on May 14, 2008 to shareholders of record as at May 7, 2008.