StealthGas Offloads Three LPG Tankers
LPG shipping company StealthGas has started the year with the sale of three second-hand ships cashing in USD 17 million.
The ships in question are the 2006-built Gas Enchanted, which has already been delivered to its new owners, and 1998-built Gas Legacy and 1996-built Gas Evoluzione, scheduled for deliveries in the third quarter of 2018.
“More evidence that values are firming even on older vessels was provided by these sales, as we sold the Gas Legacy at 5.6 times demolition value and the Gas Evoluzione at 4.2 times demolition value,” Michael Jolliffe, StealthGas’ Board Chairman, said.
The company has seven more ships older than 20 years which are also sale candidates.
The sale of older tonnage coincides with the delivery of the last 22,000 cbm semi-refrigerated newbuild LPG, which concluded the company’s 26-strong newbuilding program.
StealthGas ended the first quarter of 2018 with a net loss of USD 5.8 million, compared to a net income of USD 2 million for the three months ended March 31, 2017.
Revenues for the period amounted to USD 39.7 million, an increase of 4.2 pct year-on-year, mainly due to improved market conditions in the small LPG segment.
Jolliffe said that the company’s net revenue and profitability were affected by the rise in oil prices which increased voyage costs and LIBOR rates. In addition, slower spot market for LPG around Chinese New Year and weak earnings of the company’s tankers led to lower than anticipated margins.
The results were are also impacted by costs related to the delivery and commencement of trading for new vessels in the fleet as well as significant ballasting costs on a number of vessels.
During the past three months, the company concluded ten new time charter contracts and contract extensions.
“We also chartered in an LPG vessel from a third-party to take advantage of this positive market momentum. What I would like to note is that we have 19 vessels finishing their period contracts in the period from this month until December 2018 and they will most likely be chartered at improved rates, leveraging our company’s revenue,” Harry Vafias, Chief Executive Officer of StealthGas, said in a conference call.
“We continue to observe that our core market’s fundamentals have improved as rates for small LPG carriers are still on the rise, and the forecast is that they will continue to do so at least for the next couple of years,” Joliffe said.
“Taking this into account, our main focus is to take advantage of this positive market momentum to the fullest and calibrate our fleet management strategy so as to increase our profitability. We have so far in the second quarter of 2018 reduced our commercial idle days by about 90% compared to the first quarter of this year. With an asset base in excess of USD 1 billion, low leverage and ideal demand and supply conditions, combined with improving freight rates, gives reason for optimism for the future.”