Weak Market Rates Affect Navios Acquisition’s Earnings

Image Courtesy: Navios Maritime Acquisition

NYSE-listed owner and operator of tankers Navios Maritime Acquisition has seen its net income drop by 18 percent to USD 5.6 million in the first quarter of the year from USD 23.7 million reported a year earlier.

The lower new income was due to a USD 20.4 million decrease in EBITDA and a USD 0.2 million increase in direct vessel expenses, partially mitigated by a USD 1.5 million increase in interest income, USD 0.7 million drop in depreciation and amortization and a USD 0.3 million decrease in interest expense and finance cost.

The company’s EBITDA decreased to USD 37.4 million in the quarter ended March 31, 2017, compared to USD 57.7 million recorded in the first quarter of 2016. Navios Acquisition also said that its revenue stood at USD 64.4 million, down by 19.8% from USD 80.4 million seen in the first quarter of the previous year.

The decrease was mainly attributable to the drop in market rates during the first quarter and a decrease in revenue by USD 3.8 million due to the sale of one MR2 product tanker in January 2016 and two chemical tankers in each of October and November 2016.

“Our business model has two distinct characteristics. First, we seek long-term charters when available. This provides above market earnings during times in which period employment is unavailable and the spot rates are contracting. For the first quarter of 2017, Navios Acquisition’s average charter rate for its fleet was about 42% higher than the spot market average for this fleet,” Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition, said.

“Second, we enjoy economies of scale through our relationship with Navios Holdings. Navios Acquisition’s operating costs were approximately 17% lower than the average of its listed peers. These efficiencies created estimated savings of USD 22.8 million in 2016,” Frangou added.

Navios Acquisition currently owns 36 vessels, of which eight are VLCCs, 26 are product tankers and two are chemical tankers.

As of May 16, 2017, Navios Acquisition had contracted 90.4% of its available days on a charter-out basis for 2017, expecting to generate revenues of approximately USD 183.1 million. The average contractual daily charter-out rate for the fleet is expected to be USD 17,833.

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