Struggling Korean Duo Drags Navios Partners to Loss
Greek owner and operator of container and dry bulk vessels Navios Maritime Partners L.P. saw a net loss of USD 33.86 million due to struggles of two top South Korean container shipping companies.
The company’s net income for the three months ended September 2016 was affected by a USD 19.4 million loss on the disposal of the Hyundai Merchant Marine (HMM) shares and a USD 20.5 million loss from the non-cash accelerated amortization of the intangible assets relating to the two vessels chartered out to bankrupt Hanjin Shipping.
Following Hanjin Shipping’s filing for receivership in August 2016, Navios Partners had two Capesize vessels chartered to Hanjin at a net rate of USD 29,356 per day until December 2020. In September, both vessels were redelivered to Navios Partners’ commercial management and were rechartered to third parties. Navios is closely monitoring the developments and is proceeding with claims for the lost revenues, the company said.
Navios Partners’ profit in the third quarter of 2015 amounted to USD 11.76 million.
In addition, the company recorded an 11.8 percent decrease in its revenue for the third quarter of 2016, which went down to USD 50.3 million from USD 57.1 million seen in the same period last year. Navios Partners’ revenue dropped mainly due to decrease in Time Charter Equivalent (TCE) rate.
In October 2016, Navios Partners agreed to acquire a 2004 built Capesize vessel for a total cash consideration of USD 15.1 million, paying a deposit of 10 percent in November 2016. The vessel is expected to be delivered in the fourth quarter of 2016, Navios Partners said.
Looking at the nine-month results, Navios Partners’ net loss was USD 50.46 million, compared to a net income of USD 33.99 million recorded in the first three quarters of 2015.
The company said that net income for the nine months ended September 30, 2016, was negatively affected by the accounting effect of USD 17.2 million impairment loss on the sale of the vessel MSC Cristina, the loss on the disposal of HMM shares and the loss related to two vessels.
Additionally, the company’s revenue for the first nine months of this year amounted to USD 140.85 million, against USD 170.36 million seen in the same period last year.
“Since the beginning of 2016, we have repaid almost USD 107 million of debt and have net debt to book capitalization of 42.9 percent. In addition, we have no significant debt maturities until 2018. Under our current cost structure and with current spot market rates, we expect to generate about USD 21 million in free cash flow for the remainder of 2016 and about USD 84 million in free cash flow for 2017,” Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners, said.