Norden Swings to Q1 Loss amid Dry Cargo Woes
Miserable conditions in the dry bulk market have pushed Danish shipping company Dampskibsselskabet NORDEN A/S (Norden) to a loss of USD 5 million in the first quarter of 2016, compared to a profit of USD 27 million in the same period last year.
The company’s operating earnings also reached a loss of USD 1 million.
In February this year, the Baltic Dry Index plunged to the lowest index figure ever, contributing to a loss of USD 19.8m during the first quarter in Norden’s dry cargo segment.
However, despite the market headwinds Norden’s dry cargo vessels managed to achieve earnings that were 37 percent above the market average. Nevertheless, the adjusted result for the period in dry cargo market ended at a loss of USD 20 million, corresponding to operating earnings loss of USD 17 million.
The company’s results in the tanker market were somewhat better, with an adjusted result of USD 15 million, corresponding to operating earnings of USD 16 million.
“NORDEN’s tanker business still brings home reasonable results, which contributes to cushion the effects of a historically poor quarter in the dry cargo market. The dry cargo index the Baltic Dry Index reached a new low in February, and despite a record number of scrapping of dry cargo vessels, this could not make up for the many deliveries of new vessels. Based on the increase in Chinese imports, the dry cargo market saw a slight improvement in March,” CEO Jan Rindbo comments.
For the remainder of the year, the company says it still expects challenging times in the dry cargo segment, adding that it is prepared for the situation where many new tanker vessels will put pressure on the rates, although the demand for oil is growing.
In line with previous expectations, Norden forecasts the adjusted results for the year to range between USD -60 to USD 30 million.
The company’s fleet totaled in 275 vessels at the end of Q1, which is 47 vessels more than at the end of 2015.