Norden Cuts 2017 Outlook
Image Courtesy: NORDENDanish shipping company Dampskibsselskabet Norden A/S has trimmed down its expectations for the adjusted results for the year to USD -20 to 20 million.
Specifically, the company said it anticipates its dry cargo business results to post a loss ranging between USD 5-25 million and its tanker segment performance to range between USD -15 million to USD 15 million.
The expectations were narrowed from USD -20 to +40 million in the first quarter as the company relied on the recovery of dry cargo market.
Nevertheless, the combination of high coverage and a strong spot market has resulted in a weak start to the year in the dry cargo market, making it unlikely that the higher part of the expectations range can be achieved, Norden said.
For the tanker market, the outlook remains unchanged, as challenging market fundamentals prevail amid low demand for tankers and continuing pressure from strong deliveries over the past year.
“Norden still expects a gradual recovery into 2018 for product tankers as supply growth continues to decrease and inventories of refined products are normalized. Strong fleet growth for crude tankers could have a negative impact on rates for product tankers, but the effect is not expected to prevent rates from improving compared to the rate levels in 2017,” the company added.
However, for the rest of the year, the company said rates are expected to further weaken.
“The inventories of refined products are adjusting fairly slowly, and while the delivery pace of product tankers is slowing, supply growth from the last 2 years still has to be absorbed.”
In the second quarter, Norden booked a loss of USD 3 million, a somewhat smaller loss when compared to corresponding period of 2016 when the loss was USD 4 million.
During the period, Norden’s tanker business stayed in the black, posting an adjusted result of USD 3 million, compared to USD 7 million in the second quarter of 2016.
The generated TCE earnings for MR and Handysize stood at USD 14,871 per day and 12,800 per day, respectively.
The company’s dry cargo activities generated an adjusted loss USD 7 million, also trimmed down from USD 11 million loss from Q2, 2016.
During the quarter, Norden entered into 3-5 year charter agreements which include 2 MR tanker newbuildings and 3 Handysize tankers on long-term charter agreements. The 2 MR tankers are scheduled to be delivered in mid-2019 and early 2020, while the 3 Handysize tankers were delivered in July 2017. Additionally, the company took advantage of the market to acquire 2 secondhand MR tankers with delivery in the second half of 2017.
At the end of the second quarter of 2017, Norden had 2 dry cargo newbuildings held for sale scheduled to be delivered in the second half of 2017 once completed at the yard.
