Concordia Maritime Posts Q2 Profit

Facing a “gradually deteriorating market,” Sweden based tanker shipping company Concordia Maritime said it was able to post a profit in Q2 2016 based on high vessel employment and successful chartering, though still coming in under its Q2 2015 results largely due to an arbitration settlement and lower daily income for its vessels.

The company reported a profit before tax of SEK 12.4 (44) million for the second quarter 2016, with operating cash flow (EBITDA) of SEK 57.2 (105.2) million, corresponding to USD 7 (13.1) million.

“During the second quarter, the tanker market in general was affected by a seasonal decline, which was relatively strong this year, particularly in the heavy products segment,” said Concordia Maritime CEO, Kim Ullman. “Despite this, the utilization rate and income for our vessels were still good.”

The company said it continued to optimize fleet disposition during the quarter, with six of its 10 65,200 dwt P-MAX tankers contracted out, including a one year extension for Stena Polaris from May 2016. Three of the company’s P-MAX tankers are employed on consecutive voyage charters in the Far East, while the other three are employed on pure time charter contracts, which were signed at the beginning of the first quarter.

“With these arrangements, we are able to ensure continuous employment for the vessels. Time charter contracts also generate good solid income for the vessel during the period in question, while we balance our exposure to the spot market,” Ullman said.

Income for the product tanker fleet (spot and TC) was USD 19,500 (20,700) per day, while income for the suezmax tanker Stena Supreme averaged USD 33,300 (39,500) per day for the quarter – both beating Clarksons theoretical index.

Also during the second quarter, Concordia Maritime reached an agreement to pay USD 9.25 million to settle a dispute that arose in connection with Stena Primorsk’s grounding in the Hudson River in December 2012, the cost of which was largely offset by a completed USD hedge position and additional USD 5 million nonrecurring income related to IMOIIMAX vessels.

“In the long term, we expect the low price of oil and ongoing changes in the global refinery infrastructure to continue contributing to underlying stable demand for transportation of both oil and refined oil products,” Ullman said. “In a shorter perspective, we believe that the combination of continuing high inventory levels and an increasing number of deliveries of new ships will have a continuing negative effect, which we have already begun to see. Looking at 2016 as a whole, we expect generally lower levels than in 2015, but higher than in 2014.”

 

Interim report January 1 – June 30, 2016
•Total income, Q2: SEK 280.8 (285.6) million, 6 months: SEK 544.4 (546.6) million
•EBITDA, Q2: SEK 57.2 (105.2) million, 6 months: SEK 160.6 (192.5) million
•Result before tax, Q2: SEK 12.4 (44.0) million, 6 months: SEK 45.8 (72.2) million
•Result per share after tax, Q2: SEK 0.26 (0.92), 6 months: SEK 0.96 (1.51)
•P-MAX vessel Stena Polaris chartered out. The contract is for one year and runs from May 2016.
•Agreement reached on settlement of the arbitration dispute. Cost and payment of USD 9.25 million during the second quarter.
•IMOIIMAX-related additional payment of USD 5 million received during the second quarter.
•Positive earnings effect and payment of SEK 23 million from completed USD hedge position during the second quarter.

Key ratios
•Total income, SEK million 544.4 (546.6)
•EBITDA, SEK million 160.6 (192.5)
•EBITDA, USD million 19.3 (23.1)
•Operating result, SEK million 45.1 (91.4)
•Result after tax, SEK million 45.8 (72.2)
•Equity ratio, 44% (42)
•Return on equity, 8% (2)
•Available liquid funds, including unutilised credit facilities, SEK million 385.9 (229.5)
•Result per share after tax, SEK 0.96 (1.51)
•Equity per share, SEK 39.83 (36.34)