Genco’s CEO Says There Are More Purchase Opportunities

Dry BulkIllustration. Image Courtesy: Pixabay under CC0 Creative Commons license

The U.S.-based dry bulk shipping company Genco Shipping & Trading Limited has been very aggressive over the past few months with vessel acquisitions and there appears to be room for more.

According to the company’s Chief Executive Officer, John C. Wobensmith, there are still opportunities for purchases on the market.

“The vessels that we bought are very high spec, very fuel efficient with the focus on 2020 and outside earnings versus the index. Those were not the easiest transactions to shake out. But because of some relationships we have, we were able to get those done.

“On the minor bulk side, the fleet renewal program is in place and we expect to have that completed by the end of the year. And part of that program is to sell some of the older, less-efficient ships and redeploy the capital into newer more fuel-efficient tonnage,” Wobensmith added while speaking in a conference call.

Back in July, Genco bought two Capesizes for USD 98 million. The deal was announced just a month after the company bought two 180,000 dwt Capesizes and two Ultramaxes, splashing USD 141 million on the acquisitions.

A for the rest of its fleet renewal efforts, Genco has earmarked 12 more ships for sale, which is expected to be completed by the end of the year. This is in addition to the latest sale of three 1990s-built vessels, including one Panamax, the Genco Surprise and two Handysizes, the Genco Explorer and the Genco Progress.

For the first half of 2018, the dry bulk owner and operator recorded a net loss of USD 56.9 million, deepening its loss of USD 30.1 million booked in the first half of 2017.  The company’s net loss for the second quarter of the year was USD 1.1 million.

 “We continued to benefit from our strengthened commercial platform in the second quarter while further implementing our strategy to position Genco to more fully capitalize on a robust drybulk market. Drawing on Genco’s strong access to the capital markets and our long-standing relationships with our leading bank group, we completed a successful capital raise and arranged for two new credit facilities. Based on this success, we took advantage of the opportunity to further strengthen and grow our fleet and enhance the company’s earnings power,” Wobensmith said commenting on the company’s results.

“We believe this is an attractive entry point in the cycle given the earnings environment for both of these sectors, strong demand for drybulk commodities, and multi-decade low vessel supply growth rates.”

As for the market outlook, fundamentals point to a positive period for dry bulkers moving forward. In terms of vessel supply, net fleet growth in the year-to-date is 1.9 pct and newbuilding deliveries were down by 41 pct year-over-year through the first 7 months of 2018, as explained by Peter Allen, Genco’s Vice President and Drybulk Market Analyst.

Scrapping has been almost non-existent given improved market conditions, with demolitions dropping by 74 pct to 2.6 million deadweight tons, reaching the lowest year of scrapping since 2007.

“Through the end of this year, newbuilding deliveries are expected to be softer than the first half as vessels slipped to the next built year. This is expected to ease fleet growth in the coming months, which could be met with improved trade volumes and leading to a tighter overall market,” Allen said in the conference call.

“We also point out that it remains to be seen how much of the orderbook would actually deliver, considering that the slippage rate this year is running at approximately 25 pct. There generally remains good visibility on the supply side over the next 18 months, which could lead to net fleet growth continuing at multi-decade lows and be a positive driver for the dry bulk market going forward.”

Following the conclusion of vessel sales and acquisitions, Genco’s fleet will consist of 17 Capesize, five Panamax, six Ultramax, 21 Supramax, one Handymax and 13 Handysize vessels with a carrying capacity of 5,400,000 dwt, and an average age of 9.2 years.

World Maritime News Staff

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