DIS’ Fiori bullish for MRs going forward

Nov 13 2015


d’Amico International Shipping (DIS) said that product tanker markets remained firm throughout most of the third quarter of 2015.

Rates started to ease towards the end of September, as demand slowed and stocks built. Globally, gasoline has dominated recent growth, accounting for just below 50% of extra barrels delivered in 3Q15.

Refinery maintenance peaked at the end of September with over 9 mill barrels per day crude distillation capacity offline, equivalent to 10% of global capacity. This will drop to 4 mill barrels per day this month and to 2 mill barrels per day in December.

The perceived rate assessment for a one year charter (which is the best indicator of spot market future expectations, DIS said) for an MR has now moved in line with the spot market. In 1Q15, the one year rate remained flat at $15,250 per day and rose throughout Q2/Q3 to reach $18,500/$19,000 per day going in 4Q15.

This very favourable market scenario, which gained further momentum in 3Q15, allowed DIS to generate a net profit of $14.7 mill in the quarter and $44.8 mill in the first nine months of 2015. This result compares with $0.28 mill posted in the same quarter last year and $5.2 mill recorded for the nine month period of 2014, which also included $6.5 mill ‘Profit on disposal of vessels’.

In 3Q15 DIS experienced its best TCE result of the year thus far, generating a daily average spot rate of $21,219 versus $13,867 in 3Q14. Whilst in the nine month period, daily average spot rate was of $19,739, a level which was $6,605 per day higher than the same period last year.

At the same time, 45.1% of DIS total employment days in the nine month period  were covered through timecharters at an average daily rate of $15,129.

Mainly thanks to the very positive TCE performance realised in the period, DIS achieved an EBITDA of $29.7 mill in 3Q15 and $74.8 mill in the first nine months of this year, compared with $5.9 mill and $13.7 mill posted in 2014, respectively. As a result, 3Q15 EBITDA was $ 3.5 mill higher than the total recurring EBITDA generated for the whole of 2014.

In 3Q15, DIS ordered two additional ‘Eco design’ LR1s, expected to be delivered by Hyundai Mipo Dockyard between 2Q and 3Q 2018, for $44 mill each.

Marco Fiori, DIS CEO, commented:”DIS has achieved one of its best quarterly results. The Product tanker rates are still gradually improving, leading to a very positive outlook for the current year, leading me to be very confident about the perspectives of the product tanker industry in the medium and long term driven by factors such as the US ever growing role as a net exporter of products and the boosted refining capacity in the Middle and Far East which will further expand the tonne/mile demand.

“We have secured already a good percentage of DIS future revenues at advantegeous rates, expanding our fleet, allowing us to be ready to take the maximum advantage of what we think will be a strong market. These additions brought DIS total fleet to more than 50 operated vessels, placing the company amongst the top players of the industry,” he said.

Giovanni Barberis, CFO, said: “Thanks to a favourable market and an extremely efficient structure, on one hand we have achieved significant results in just one year, as doubling the EBITDA margin and a considerable net profit, on the other hand, notwithstanding a huge investment plan of over $750 mill, the ratio equity/debt remains balanced, highlighting the ability of the company to generate significant operating cash flows.” 



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