Norway-based dry bulk shipping company Golden Ocean Group Limited (GOGL) managed to narrow its net loss to USD 39.2 million during the second quarter of the year, against a net loss of USD 68.2 million reported in the first quarter of 2016.
Excluding impairment loss, mark to market loss on interest rate derivatives and other one-off effects, the net loss for the second quarter is USD 33.4 million compared with a net loss of USD 41.5 million for the preceding quarter.
The company said that the decrease in this loss is primarily due to the increase in vessel earnings of USD 16.2 million attributable to the improved market in the quarter, partially offset by an increase in charter hire expenses and an increase in interest expense.
For the half-year period ended June 30, GOGL’s net loss stood at USD 107.5 million, against a net loss of USD 110.8 million reported in the first half of 2015.
“Based on the contract cover for the third quarter and spot rates obtained so far into the quarter, we expect the operating result for the third quarter to improve relative to the second quarter of this year,” GOGL said.
Cash and cash equivalents decreased by USD 42.8 million in the second quarter.
In June 2016, the company entered into agreements with one yard for postponement of delivery for six newbuildings for seven to nine months per newbuilding. Expected delivery for these vessels will now be from January to November 2017, according to GOGL.
In May 2016, the company took delivery of Golden Fulham, a Capesize newbuilding. A final installment of USD 41.1 million was paid at this time and USD 25 million was drawn down in debt.
In the same month, the owner of the Golden Lyderhorn, which is chartered in by the company and recorded as a vessel held under capital lease, notified GOGL that they intended to exercise their option to sell the vessel to the company for a net price of USD 9.5 million with intended delivery in August.
The company entered into an agreement to sell the vessel at the time of its re-delivery to the company to an unrelated third party for net proceeds of USD 3.5 million and has recorded an impairment loss of USD 1 million in the three months ended June 30, 2016 in connection with this transaction. The vessel was delivered to the new owner on August 22, 2016.
As of June 30, 2016, the company had twelve vessels under construction, of which one has been sold and will be delivered to the new owners in the fourth quarter of 2016, upon which the company will receive net sales proceeds of USD 46.2 million.
The company’s outstanding commitments for its twelve newbuildings amount to USD 372.7 million with expected payments of USD 173.4 million in 2016 and USD 199.3 million in 2017 for delivery of six vessels in 2016 and six vessels in 2017.