Paragon Hurt by Plummeting Market Rates

Paragon Shipping Inc., a global shipping transportation company specializing in dry bulk cargoes, has reported a a net loss of over USD 35 million for the six months ended June 30, 2014. The company states that even though there was an increase in the number of operated vessels on average, a weak dry bulk market in the second quarter was cited as one of the contributors to the company’s loss increasing tenfold year-on-year.

Gross charter revenue was USD 28.9 million for each of the first six months of 2014 and 2013. The company reported a net loss of USD 35.5 million, compared to a reported net loss of USD 3.5 million in 2013.

EBITDA for the six months ended June 30, 2014 was negative USD 21.2 million, compared to positive USD 8.7 million for the six months ended June 30, 2013.

Adjusted EBITDA, excluding all non-cash items described below, was USD 1.2 million for the six months ended June 30, 2014, compared to USD 9.3 million for the six months ended June 30, 2013.

The company operated an average of 14.0 vessels during the six months ended June 30, 2014, earning an average TCE rate of USD 8,208 per day, compared to an average of 12.8 vessels during the six months ended June 30, 2013, earning an average TCE rate of USD 10,930 per day.

Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, said: “For the second quarter of 2014, the dry bulk market, and more specifically the market for Panamax vessels, was weaker than expected.

The Baltic Panamax Index 4 time charter routes average in the second quarter of 2014 was USD 6,304 per day, compared to USD 10,427 per day in the first quarter of 2014 and USD 7,775 per day in the second quarter of 2013, which represents a decline of 39.5% and 18.9%, respectively.

Although we continued to outperform the market during the quarter, earning an average TCE rate of USD 7,870 per vessel per day, the overall decline in the market rates had a direct impact on our second quarter results, as we reported a net loss of USD 9.7 million, or USD 0.39 per common share.

As we continue to expand our fleet, we will continue to take advantage of economies of scale and cost-cutting measures. In the second quarter of 2014, we reduced our daily vessel operating expenses by 12.0% year-over-year.“

The company’s current newbuilding program consists of two Ultramax dry bulk carriers (Hull numbers DY152 and DY153) with expected deliveries in 2014, as well as two Ultramax dry bulk carriers (Hull numbers DY4050 and DY4052) and three Kamsarmax dry bulk carriers (Hull numbers YZJ1144, YZJ1145 and YZJ1142) with expected deliveries in 2015.

The company’s newbuilding program has an aggregate cost of USD 201.2 million, of which USD 138.6 million is currently outstanding.

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