MOSCOW (MRC) -- Odfjell (Bergen, Norway) reports net earnings of USD3.9 million for the third quarter of 2020, swinging to a profit from a net loss of USD1.1 million in the prior-year period, reported Chemweek.
The earnings are down, however, from USD30.9 million in the second quarter, reflecting a seasonal slowing of the chemical tanker market and a high number of vessel dry dockings in the third quarter, it says.
EBITDA rose 40% year on year (YOY) to USD71.7 million on sales that increased 6% to USD247.7 million, although both figures are down on the second quarter by 12% and 2%, respectively.
Despite the challenging macro environment, Odfjell continues to renew vessel contracts at higher rates compared to last year, “which is an encouraging sign,” says CEO Kristian Morch. “We expect the fourth quarter results to be in line with the third quarter,” he says.
Odfjell’s tankers business reported net earnings of USD2.6 million, swinging to profit from a loss of USD14.8 million a year earlier, but down sequentially from USD19.3 million in the second quarter. EBITDA of USD63.6 million was up almost USD20 million YOY but down USD10 million on the previous quarter, due mainly to lower tanker spot rates during the seasonal slowdown. The company shipped 3.1 million metric tons of product during the third quarter, in line with the second quarter. “The western hemisphere market improved relative to the previous quarter, while activity in the eastern hemisphere slowed down and has also been the area impacted the most by increased competition from swing tonnage operators,” Odfjell says. The global chemical tanker orderbook stands at 5.6% of the current fleet, with 16 new orders for chemical tanker vessels concluded during the quarter.
The International Monetary Fund’s (IMF) latest economic outlook has forecast an expected recovery in global GDP growth from a contraction of 4.4% in 2020 to growth of 5.2% in 2021, according to Morch. “IMF expects the speed of recovery to differ between regions, with large chemical importers like Europe and Asia to grow faster than the larger chemical exporters. This should lead to continued regional supply and demand imbalances, leading to continued stimuli for seaborne trade of chemicals,” he says.
Most industries requiring liquid chemicals have seen steady demand during the pandemic, with the exception of the automotive and construction industry, according to the company. “Continued recovery within construction and automotive are key to ensure that global inventory levels normalize, and growth rates climbs back to historical levels,” it states.
Odfjell is forecasting chemical tanker demand growth to average 3% between 2021 and 2023 relative to supply growth of 1% over the same period.
The company’s tank terminals business reported net earnings of USD1.5 million, down from USD13.2 million a year earlier and USD10.0 million lower than the second quarter of this year. EBITDA of USD7.8 million was up slightly both YOY and sequentially. Underlying demand for storage “continues to be strong” with an average commercial occupancy rate of 99% in the third quarter, it says. Activity levels at its terminals are rebounding, with the average total number of handlings up by approximately 16% compared to the second quarter, with throughput volumes showing signs of reaching normalized levels in the latter part of the third quarter, it adds.
Growth plans for its Houston tank terminal are on track, with Odfjell nearing a final investment decision on its Bay 13 expansion project, due onstream in 2022. The expansion represents an increase of 32,000 cu meters in storage capacity specifically for specialty chemicals, catering to truck, rail, ship, and barge modalities, it says. Subsequent phases of its Houston expansion plans are expected to come into operation from 2024 onwards, it adds.
As MRC informed earlier, in July, 2020, Odfjell (Bergen, Norway) says a significant expansion of its European chemicals storage capacity had been completed at the port of Antwerp, Belgium.
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