Still affected by Hanjin bankruptcy, Athens-based containership owner Danaos Corporation recorded a net income of USD 20.2 million in the second quarter of 2017, considerably lower than a net income of USD 44.6 million posted in the same period last year.
The company’s operating revenues stood at USD 113.9 during the three-month period ended June 30, 2017, a decrease of 16.9% when compared to USD 137 million seen in the same quarter of 2016.
“Our earnings for the second quarter of 2017 continue to reflect the effect of the Hanjin bankruptcy on the company’s financial performance. Adjusted net income came in at USD 29 million for this quarter compared to USD 47.7 million for the second quarter of 2016, a decrease of USD 18.7 million. This decrease was attributable to a USD 19.3 million decrease in the operating revenues of the vessels that were previously chartered to Hanjin, and was partially offset by marginally improved operating performance by USD 0.6 million,” John Coustas, Danaos’ CEO, commented.
Coustas added that Danaos is in breach of certain financial covenants as a result of the bankruptcy of former South Korean shipping giant. Currently, Danaos is in discussions with its lenders regarding its noncompliance with these covenants and refinancing the 2018 maturities of substantially all of its debt. However, Danaos continues to generate positive cash flows from its operations and currently is in a position to service all operational obligations as well as all scheduled principal amortization and interest payments under the original terms of its debt agreements, according to Coustas.
“The charter market is moving sideways at levels slightly above the lows of 2016 but we have not yet seen a meaningful improvement to signal a market recovery. Box rates have improved as a result of improved capacity deployment through the alliances and the recent industry consolidation activity has reduced our counterparty risks,” Coustas said.
“On the other hand, consolidation in the liner industry combined with legacy newbuilding orders for large vessels still to be delivered is anticipated to maintain pressure on charter rates for a considerable amount of time. Danaos continues to have low near term exposure to the weak spot market with charter coverage of 87% for the next 12 months based on current operating revenues and 66% in terms of contracted operating days,” he added.
During the three months ended June 30, 2017, and June 30, 2016, Danaos had an average of 55 boxships. The company’s fleet utilization for the second quarter of 2017 increased to 97.9%, while fleet utilization for the vessels under employment, excluding the off charter days of the vessels that were previously chartered to Hanjin, rose to to 98.8% in the three months ended June 30, 2017 compared to 96.9% in the three months ended June 30, 2016.
Danaos’ adjusted net income amounted to USD 53.6 million for the six months ended June 30, 2017, compared to USD 94.9 million seen in the same period last year. As explained, the decrease in adjusted net income is attributable to a USD 41.3 million decrease in operating revenues as a result of the Hanjin bankruptcy, a further decline in operating revenues as a result of weaker charter market conditions and a drop in other income.