Rickmers Profit Nosedives, Plans Lay-ups
Rickmers Maritime incurred a loss of US$55.6m in the second quarter, wider than the year earlier $15.7m on the back of a non-cash impairment charge as charter market conditions deteriorate.
The Singapore-based consider is planning to lay up some of the 11 containerships it has operating in the spot market to save costs when the vessels are redelivered.
Charter revenue fell 37 per cent to $18 million, due to reduced charter rates and lower vessel utilisation rates.
The company’s net loss for the first half of this year was $56.9 million, compared to $8.6 million during the first six months of last year. Additionally, charter revenue in the six-month period this year was $ 39.3 million, compared to $57.1 million in the first half of 2015.
Vessel operating expenses increased by 5% year-on-year (y-o-y) to US$10.2 million due mainly to higher bunker consumption from vessel repositioning between charters, off-hire, and increased vessel idle time.
Rickmers Trust Management Pte. Ltd is the Trustee-Manager of Rickmers Maritime.
The Trustee-Manager proactively monitors fleet operating costs, and has in 2Q2016 implemented cost saving initiatives which are expected to reduce vessel operating expenses going forward.
Finance expenses decreased by 40% y-o-y to US$3.6 million due to the reduction of outstanding loan balances and the expiry of interest rate swaps.
The Trust recognised a non-cash impairment of US$51.5 million in 2Q2016 as charter condition deteriorates, contributing to a net loss of US$55.6 million for 2Q2016 and US$57.0 million for 1H2016.
Rickmers Maritime’s fleet of 16 containerships recorded an overall utilisation rate of 91.4% in 2Q2016, as compared to 99.8% in 2Q2015. In 2Q2016, the fleet recognised 124.6 off-hire days, due mainly to the idling of three vessels between employments. RTM has since secured new employments for these vessels, and the Trust’s fleet is fully employed as at 30 June 2016.
Soeren Andersen, Chief Executive Officer of RTM, commented, “So far, we have been fairly successful in keeping the Trust’s vessels employed despite the depressed market. However, over the next 12 months, we are likely to face even stronger headwinds as we are seeing acceleration in redeliveries of panamax vessels, driven by the upsizing of the Panama Canal. We have 11 vessels trading in the spot market, and we need to take practical measures and actively consider decommissioning some of these vessels by laying them up when they are redelivered."
This will reduce operating costs significantly while the market is depressed. The shipping market is volatile, and we have to strike a balance between minimising costs through this extremely adverse time by decommissioning vessels, and at the same time keeping some vessels active in the spot market for the flexibility to capitalise on any uptick in the market, he said.
Rickmers Maritime’s fleet is 72.0% employed for 2016, and through existing charter agreements, the Trust has US$111.5 million of secured revenue between 30 June 2016 and the expiry of the last charter contract in 2019.
The charter market remains depressed, and the large idle fleet continues to put pressure on charter rates. According to Alphaliner, 85 of the world’s fleet of 3,000 – 5,099 TEU vessels remain idle in July 2016. While demolition levels in 1H2016 have far exceeded that of full year 2015, there is still excess capacity in the market, outweighing demand.
