Ocean Yield: Good Time to Invest in New Ships

Norwegian shipowner Ocean Yield ASA said it is financially well-positioned for new investments in vessels with long-term charter, following a sale of bonds in American Shipping Company ASA (AMSC). 

“Several shipping segments show indications of bottoming out and orders for new vessels remain low. This, in combination with historically low vessel values, may provide opportunities for attractive investments during 2017,” Ocean Yield said in its financial report for 2016.

In February 2017, the firm completed a refinancing of the bonds in AMSC. Ocean Yield will receive cash proceeds of about USD 156 million including accrued interest and USD 50 million in new bonds in return for the redemption of existing bonds.

Ocean Yield’s financial results show that the firm delivered a lower year-on-year profit. Profit for 2016 went down to USD 77.5 million in 2016 from USD 105 million in 2015.

On the other hand, revenue for 2016 rose to USD 294.4 million from USD 256.7 million in 2015.

In Q4 2016, profit was USD 0.7 million, lower than a profit of USD 28.3 million seen in the same period of 2015. The drop is “largely related” to an impairment charge of USD 35.6 million related to the vessel Lewek Connector.

Revenue for Q4 2016 increased to USD 82 million from USD 65.6 million in the three-month period of 2015.

Higher revenue is attributed to the delivery of six newbuildings during Q4 2016 in addition to full earnings contribution from ships delivered in Q3.

These included two chemical tankers chartered out to Navig8 Chemical Tankers, Navig8 Tourmaline and the Navig8 Tanzanite. Further two chemical tankers, Navig8 Universe and Navig8 Constellation, chartered out to the Navig8 Group, were delivered in October and November.

In addition, Ocean Yield took delivery of the first newbuilding gas carrier from Sinopacific Offshore & Engineering (SOE), China, in November.

In December 2016 and February 2017, Ocean Yield took delivery of the fourth and fifth mega boxships from Samsung Heavy Industries, MSC Mirjam and MSC Rifaya, with long-term charter to Mediterranean Shipping Company.

The final containership in a series of six newbuildings is expected to be delivered in March 2017. All six ships Ocean Yield owns in a joint venture with private shipowner Quantum Pacific Shipping, part of Quantum Pacific Group.

Ocean Yield’s fleet currently has 34 vessels, comprising chemical tankers, LR2 product tankers, gas carriers, mega containerships, pure car & truck carriers (PCTCs) and offshore support vessels.

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