Danaos Corporation has become the latest containership owner to announce a return to profit as it benefited from a high charter contract coverage in 4Q 2017.
The company recorded a net income of USD 22.8 million in the fourth quarter of 2017, compared to a loss of USD 446.6 million seen in the corresponding quarter a year earlier.
What is more, operating revenues increased by 1.9 percent to USD 114.2 million in the three months ended December 31, 2017, from USD 112.1 million reported in the same period of 2016.
“Our earnings for the fourth quarter of 2017 improved markedly when compared to the earnings of the fourth quarter of 2016 which had been negatively impacted in the aftermath of the Hanjin bankruptcy,” John Coustas, Danaos’ CEO, explained.
“This is mainly the result of our high charter contract coverage which remains at 86% for the next 12 months based on current operating revenues and 69% in terms of contracted operating days,” he added.
Net income for 2017 stood at USD 83.9 million, against a net loss of USD 366.2 million posted in 2016, while operating revenues amounted to USD 451.7 million in 2017, compared to USD 498.332 million in 2016.
As previously reported, Danaos is in breach of certain financial covenants as a result of the Hanjin bankruptcy.
“We are currently engaged in discussions with our lenders regarding restructuring our debt, substantially all of which matures on December 31, 2018. In the meantime, we continue to generate positive cash flows from our operations and currently have sufficient liquidity to service all our operational obligations as well as all scheduled principal amortization and interest payments,” Coustas said.
Although the charter market has stabilized “at slightly better levels” compared to the lows of 2016, Danaos’ CEO said the company does not expect a material improvement in the market environment this year given the large number of scheduled vessel deliveries.
“During this extended period of market weakness which has presented many challenges, we remain focused on taking necessary actions to preserve the value of our company,” Coustas concluded.
Danaos’ fleet currently comprises 59 vessels ranging from 2,200 to 13,100 TEU.