Odfjell Records Steady Q3 Earnings
EBITDA of $37 million is reflecting stable earnings both from chemical tankers and tank terminals in the third quarter.
For the chemical tankers business, activity over the summer and through the third quarter held steady and was in line with the second quarter on both contract nominations and spot activity.
In September Odfjell signed shipbuilding contracts with Nantong Sinopacific Offshore & Engineering Co., Ltd for the construction of four LPG/Ethylene carriers of 17,000 cbm. This newbuilding order is an important step in our strategy to grow and become a significant operator in the gas market.
Our shareholding in tank terminals business contributed an EBITDA of $7 million in third quarter, the same as in previous quarter. With the exception of Odfjell Terminals (Rotterdam) (OTR), terminal results were largely in line with expectations. OTR is working on a revised business plan, scheduled to be completed within year end, and has decided to possibly redevelop most of the older areas of the terminal. Current book value of OTR assets is $241 million.
As a possible consequence of the revised business plan, impairment of certain OTR assets, including customer relationships and goodwill totalling net $54 million, will be evaluated.
The U.S. economy and the U.S. dollar are finally looking up, which is good news for our business generally. The European economy is still lagging but is showing modest improvement. The big question is the strength of China's economy.
Excessive credit growth, rising local government debt and weaker export momentum may cap the recovery, from the last two quarters of slowdown.
Based on the above we expect a slow but steady increase in demand for our services. We expect the final quarter of 2013 to be similar to or slightly better for our chemical tankers than the third quarter. As to terminals, with the exception of Odfjell Terminals (Rotterdam), we expect continued stable results.
