GOGL Stays in Red, Expects Improvement in Q2

Norway-based dry bulk shipping company Golden Ocean Group Limited (GOGL) reported a net loss of USD 68.2 million for the first quarter of 2016, pretty much in line with a net loss of USD 69.3 million for the preceding quarter.

Excluding impairment, mark to market loss on interest rate derivatives and other one-off effects, the net loss for Q1 2016 is USD 41.5 million and USD 29.4 million for the preceding quarter.

The company said that the deterioration in results was primarily due to the decrease in vessel earnings of USD 13.1 million.

Cash and cash equivalents increased by USD 151 million in the first quarter.

The main cash movements were the payment of USD 161.7 million for the company’s newbuilding program, USD 48.1 million received from the sale the Front Caribbean, a newbuild delivered in February and the two newbuilding contracts sold in the prior quarter, the net draw down of debt of USD 95 million and the net proceeds from the private placement of USD 205.4 million. In addition, USD 21.6 million was used in operations.

In January 2016, the company took delivery of Golden Barnet, Golden Bexley, Golden Scape and Golden Swift, two Capesize and two Newcastlemax dry bulk newbuildings. During the same month GOGL entered into a Capesize revenue sharing agreement with three other owners of Capesize vessels.

In March 2016, Golden Ocean postponed delivery of two Capesize newbuildings from the first quarter of 2016 to the fourth quarter of 2016. The dry bulk owner and operator said that it was working consistently to further postpone delivery of the remaining newbuildings as one of its main priorities.

“Following the successful refinancing and equity issue in February, Golden Ocean has secured a strong cash position to weather the bad market currently being experienced,” the company said.

“The market has shown some improvement so far in the second quarter relative to the extremely low levels observed in the first quarter. This should lead to an improved operating result in the second quarter of 2016.”

However, rates are still below the company’s current cash break even rates of USD 10,500 per day for Capesize vessels and less than USD 7,000 per day for the smaller sizes.

As of March 31, 2016, GOGL had thirteen vessels under construction to be delivered by 2017, of which one has been sold for USD 46.2 million and will be delivered to the new owners on delivery from the yard in 2016.

The company’s outstanding commitments for its thirteen newbuildings amount to USD 413.8 million.

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