In spite of challenging markets, Norwegian shipping and tank terminal company Odfjell swung out of a loss to a full-year profit in 2016.
The firm posted a net income of USD 100 million, compared to a net loss of USD 36 million in 2015.
Odfjell’s full year EBITDA also rose to USD 238 million from USD 190 million in 2015.
In the fourth quarter of 2016, the company delivered a net income of USD 43 million, against a net loss of USD 18 million in the same period last year. EBITDA for the period stood at USD 45 million, compared to zero EBITDA in the fourth quarter of 2015.
“Our markets remained challenging, but Odfjell continues to build both financial and operational strength. Based on our strengthened position we are now launching our new strategy – the “Odfjell Compass” – which will be leading the company into the future” Kristian Mørch, CEO of Odfjell SE, noted.
With a focus on fleet growth and taking part in consolidation, the new strategy targets an operated fleet of about 100 vessels, average long-term revenue growth of 10% per year, industry-leading EBITDA margin and zero incidents.
In October 2016, Odfjell reached an agreement to sell its stake in Oiltanking Odfjell Terminals (OOT) in Oman, gaining USD 44 million. The sale is in line with Odfjell’s strategy to focus on the terminals where it has managerial control of the assets and further invest in growth opportunities in its core markets, such as Houston and Rotterdam.
Also in 2016, Odfjell started a fleet renewal program, placing orders for four chemical tankers with stainless steel cargo tanks at China Shipbuilding Trading and Hudong-Zhonghua Shipbuilding.
The company revealed it is still facing substantial delays related to the construction of liquefied petroleum gas (LPG) carriers ordered in China. On December 4, 2016, the fourth of eight newbuilding contracts were canceled and it is likely that the remaining vessels will also be canceled, according to Odfjell. All installments including accrued interest on canceled contract have been repaid.
In the long-term outlook, Odfjell said that an increased risk of growing protectionism on intercontinental trade and cooperation could potentially add risk to all shipping segments including the chemical tanker markets.
In 2017, Odfjell expects rates to be under pressure although the market is fairly balanced in a longer perspective. The firm also expects time charter results in the first quarter of this year to be in line with or marginally better than those in the fourth quarter of 2016.
Additionally, the company anticipates improved results in its terminal business due to continued strengthened performance at Odfjell Terminals (Rotterdam).