Better Spot Rates Help Odfjell Shrink Loss

Norway-based tanker and terminal operator Odfjell has continued the trend of reducing its quarterly loss amid improved spot rates and lower bunker costs.

The company’s net loss stood at USD 10.1 million in the second quarter of 2019, shrinking from a loss of USD 15.4 million reported in the previous quarter.

Revenues improved to USD 243.2 million from USD 238.3 million in the preceding three-month period. Similarly, EBITDA marked a rise in the three-month period reaching USD 56.8 million, compared to USD 47.2 million in the first quarter of 2019.

“The improvement in both spot and COA rates are still modest, but we continue to believe that we are in the early stage in the recovery of the chemical tanker market,” Kristian Mørch, CEO Odfjell SE, commented.

Several vessels on time charters redelivered in 2019 were replaced by vessels at more favorable terms, contributing to the improved Odfjell Tankers EBITDA this quarter, that was at USD 50 million, up from USD 40 million seen in the previous quarter.

The decreased Odfjell Terminals EBITDA of USD 6 million in the second quarter was attributed to a USD 1.6 million impairment related to the Ethylene project in Houston, after this project did not materialize.

“We expect next quarter to be slightly affected by the seasonal slowdown in the chemical tanker market, but we still expect to report figures in line with the second quarter.”

In the quarter ended June 30, Odfjell expanded its fleet with two vessels, a super-segregator was taken on long term bareboat charter, that was previously on commercial management to Odfjell Tankers, and one coated MR. The company is scheduled to take delivery of its first “super-segregator” newbuilding (49,000 dwt) from Hudong in August. The second newbuilding is expected to be handed over in October 2019, while the third vessel from the batch would join the fleet in January 2020.

The two vessels from Fukuoka Shipbuilding are scheduled to be delivered in the first half of 2020 on long-term bareboat contracts.

The quarter also saw the company shed its stake in Odfjell Terminals Jiangyin (OTJ), China. The divestment is part of the company’s strategy to grow and focus on chemical terminals in locations where it can harvest synergies between its tanker and terminal branches.

Odfjell further revealed that it was preparing for the new 2020 sulfur requirements by including new bunker adjustment clauses taking IMO 2020 into account into renewed contracts. Some contracts also include clauses where there is optionality to exit from the contract if an agreement on reference price can not be reached, the company said.