The Danish shipping company Norden expects an increased operating loss in 2015 after writing down the value of its dry cargo fleet and making provision with no cash flow effect of USD 340 million.
The company now predicts an operating loss of USD 297 to 277 million, compared to the previously expected USD 43 to 63 million.
Norden said that the write-down includes USD 180 million in the carrying amount of owned dry cargo vessels and a provision of USD 160 million on losses from long term dry cargo charters, which will be distributed over four years, leading to a positive EBIT impact of a similar amount over that period. About one-third of the provision will be reversed in 2016.
“On this basis, management expects continued weak rates on a level with the current FFA rates for the coming 2 years.
“After this period, the rates are expected to improve gradually,” Norden added.
Neither the write-down nor the provision has any impact on cash flows or loan agreements, and Norden said that it continues to be financially strong.
At the end of 2015, cash and securities amounted to USD 355 million, with undrawn loan of USD 296 million.