Ardmore in the red - bullish for 2017

Nov 04 2016

Ardmore Shipping Corp reported a loss from continuing operations of $1.8 mill for the three months ended 30th September, 2016, compared to a profit of $13.6 mill for 3Q15.

The company also reported adjusted EBITDA of $10.2 mill for 3Q16, compared to $24.5 mill for 3Q15.

Overall, the net loss was $4.8 mill for 3Q16, compared to a net profit of $13.6 mill for 3Q15. This reflected a loss on sale of the Ardmore Centurion, as well as a loss from continuing operations.

The company reported EBITDA of $7.2 mill for the period, compared to $24.5 mill for 3Q15.

Ardmore claimed to have delivered a solid chartering performance with spot and pool MR earning averaging $15,944 per day year to date and $13,284 per day for 3Q16.

The company took delivery of five of the six vessels that it agreed to acquire in June, 2016. The final vessel is expected to be delivered in early November. All six vessels are 49,500 dwt Eco-design IMO II/III MRs built by STX Offshore and Shipbuilding.

Ardmore also completed debt financing for the recent six vessel acquisition. Four of the vessels are being financed through a new $71.3 mill senior debt facility with ABN AMRO. The remaining two vessels have been added to the existing credit facility with ABN AMRO and DVB Bank, which was completed in early 2016; the facility has been increased by $36.6 mill and NIBC Bank has agreed to join as an additional lender under the facility.

Terms were agreed for the sale of the 29,000 dwt product/chemical tanker Ardmore Centurion for $15.7 mill. The vessel was subsequently delivered to her buyers on 4th October, 2016.

Anthony Gurnee, Ardmore’s CEO, commented: During the quarter, we continued to operate our fleet at a satisfactory level of performance in spite of a softer charter market. The current market conditions reflect below-average oil trading activity, driven by relative oil price stability and gradual de-stocking of global clean petroleum product inventories, which we expect will continue for the next two to three quarters.

Nevertheless, we anticipate an improvement in MR and chemical charter market conditions through the winter months as a result of typical seasonal activity.

In spite of this short-term market action, the underlying fundamentals of the MR sector remain very positive, with secular trends driving underlying tonne/mile demand growth at an estimated rate of 4-5%. According to the IEA, oil consumption continues to grow at 1.2 mill bpd, and much of this incremental demand is being met by export-oriented refinery activity, which not only increases volumes of refined products shipped by sea, but also the distance over which those refined products are carried.

Meanwhile, ordering activity is almost non-existent and, as a consequence, the orderbook for MRs has declined to 5.5% of the existing fleet, its lowest level in at least 20 years, which should result in net fleet growth well below projected demand growth until such time as newbuilding activity increases significantly.

Following the expected delivery of the final Eco-design MR in early November, we will have a fleet of 27 Eco MR’s with an average age of four years. This fleet expansion represents a 13% increase in revenue days for 2017 and positions Ardmore to take advantage of a strengthening charter market supported by the increasing tension between steady MR demand growth and a declining orderbook,” he concluded.  

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