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Slight Improvement for Odfjell

November 13, 2014

Norwegian shipping and tank terminal company Odfjell expects fourth quarter of 2014 to improve from the third quarter for its chemical tanker fleet amid a slightly stronger market.

 The company also attributed the brighter outlook to contract renewals, lower bunker costs and a reduced cost base.

With regard to terminals, Odfjel said it expects improved results at Odfjell Terminals (Rotterdam) due to increased utilisation and a lower cost base.

“For the remainder of the terminals we expect a slight increase in earnings due to increase capacity,” the company added.

According to the company’s third quarter results, the chemical tankers EBITDA recorded a slight improvement, reaching USD 26 million, compared with USD 24 million in the second quarter. However, Odfjell said that the upswing was not yet sustainable.

The activity in the chemical tanker markets in third quarter was quite similar that of the previous period. Time-charter results were down by 3%.

“Towards the end of the quarter the CPP market improved, which we expect will positively affect also the chemical tanker sector. Lower oil prices have started to reduce our bunker costs, but the downward trend in prices for oil products also seems to hamper trade and the activity in general,” Odfjell pointed out.

Odfjell’s shareholding in the tank terminals business delivered an EBITDA of USD 4 million in the third quarter. With the exception of the tank terminals in Rotterdam and Charleston, the terminal results were positive and in line with previous quarter.

The cost cutting and efficiency review was announced in May and fully mobilised as from July. Since then, Odfjell said that the process has been organized through work streams focusing on operating expenses, G&A, bunkers and trade optimization.

During the next two months all identified cost reductions will be subject to risk assessment and detailed planning. Implementation will take place as from January 2015, the report read.

“However, we will without delay continue implementing immediate cost saving and efficiency initiatives, related to reduced bunker consumption, trade optimization and selected cost items. The immediate initiatives are expected to bring an annualised bottom line effect in excess of USD 50 million when fully implemented,” Odfjell said.

Press Release