LPG Sector Headwinds Sink Navigator Holdings’ 2Q Profit

Owner and operator of Handysize liquefied gas carriers Navigator Holdings recorded a 79.3 percent decrease in its net income in the second quarter of 2017, which dropped to USD 2.3 million from USD 11.1 million seen in the same period a year earlier.  

The company’s operating revenue for the three-month period stood at USD 74.4 million, compared to an operating revenue of USD 72.5 million posted in the quarter ended June 30, 2016.

As explained, during the quarter, the company has benefited from increasing demand for the transportation of petrochemicals gases, with the proportion of its total revenue from long-haul trade increasing to 53% in the second quarter 2017 from 42% in the second quarter 2016.

“The petrochemical contracts of affreightment we hold for transporting ethylene from the US and a broad spectrum of olefins from Brazil have been active. We have also entered into two time charters for two of our fully-refrigerated vessels during the second quarter of 2017, with one vessel transporting LPG to Mexico and the other transporting LPG to southern Africa, a new market for us. Such commitments, along with our other time charters, have provided support to our business in a period when the LPG segment continues to experience headwinds,” Navigator Holdings said.

“Earnings across all LPG shipping segments continue to be weak, with the Very Large Gas Carrier Baltic index reaching a floor at USD 6,000 earnings per day. Uncertainties with the geographical location, timings and quantities of usual petrochemical supplies from the Middle East and Europe have limited spot activity for our voyage charter vessels during the three months ended June 30, 2017,” the company added.

In April, Navigator Holdings took delivery of Navigator Yauza, a Handysize semi-refrigerated ice class vessel from HMD. The vessel commenced a long-term time charter following delivery.

Navigator Jorf, a midsize fully-refrigerated vessel, was also handed over to Navigator Holdings from HMD in July. The ship will commence a long-term time charter later this month, according to the company.

Furthermore, in June, the company entered into a new USD 160.8 million secured term loan and revolving credit facility to refinance a loan with an outstanding balance of USD 143 million that was due to mature in February 2018.

In July, the company and Enterprise Product Partners announced the execution of a letter of intent to jointly develop an ethylene marine export terminal on the Houston Ship Channel.

In its outlook for 2H 2017, Navigator Holdings said: “Going into the second half of the year, we are committed to transport incremental ethylene volume from Europe to Asia on two of our ethylene capable vessels and in addition we will deliver two separate ethylene vessels to Braskem on three year charters for the commencement of their ethane contracts. We believe that these two contracts, combined with existing charter commitments, will help support fleet employment and utilization for the second half of 2017.”

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