The increase was mainly due to the weaker product tanker market experienced so far in 2018 and especially in the third quarter of the year, which resulted in a net loss of $20.9 mill. The first nine months of 2017 also benefited from $2.6 mill ‘profit on disposal’ following the sale of two vessels and from lower timecharter hire costs.
For the first nine months of 2018, DIS achieved a daily average spot rate of $10,574 compared with $12,290 generated in the same period of 2017.
Around 32.5% of DIS’ total employment days in the first nine months of this year, were covered by timecharter contracts at an average daily rate of $14,858 ( 2017: 33.6% coverage at an average daily rate of $15,573).
A good level of timecharter coverage is one of the pillars of DIS’ commercial strategy and allows it to mitigate the effects of spot market volatility, securing a certain level of earnings and cash generation even throughout the negative cycles, the company explained. DIS’ total daily average rate, which includes both spot and timecharter contracts, was $11,967 in the first nine months of 2018, compared with $13,392 achieved in the same period of 2017.
During the period, DIS ‘gross capital expenditures’ amounted to $100.2 mill ($56.2 mill in 3Q18), mainly due to DIS’ newbuilding plan. Since 2012, DIS has ordered 22 ‘Eco design’ product tankers (10 MRs, six Handysize and 6 LR1s), of which 20 vessels had been delivered by the end of 3Q18.
This corresponds to an overall investment plan of about $755 mill and is in line with the Group’s strategy to modernise the fleet through newbuildings with an eco-design. In addition, DIS has already fixed the majority of its newbuildings on long-term timecharters with three oil-majors and a leading refining company, all at profitable levels.
TCE earnings were $55.1 mill in 3Q18 ($65.5 mill in 3Q17) and $180.7 mill in the first nine months of 2018 ($194.2 mill in the first nine months of 2017).
On the back of a depressed market, DIS realised a daily average spot rate of $8,689 in 3Q18 (3Q17: $11,960) and $10,574 in the first nine months of this year ($12,290 in the first nine months of 2017).
EBITDA was minus $2.2 mill in 3Q18 and $7.8 mill in the first nine months of 2018, compared with $ 9 mill in 3Q17 and $33.7 mill in the first nine months of 2017.
EBIT was negative $12.7 mill in 3Q18 (negative $0.3 mill in 3Q17) and a negative $21.5 mill in the first nine months of 2018 (positive $5.9 mill in the first nine months of 2018).
DIS’ net result was negative $21 mill in 3Q18 ($7.4 mill in 3Q17) and minus $41.2 mill in the first nine months of the year ($13.6 mill in nine months of 2017). l.
Net debt as of 30th September, 2018 amounted to $588 mill, compared to $510.3 mill at the end of 2017.
Marco Fiori, DIS CEO, commented: “The third quarter of the year was characterised by a very weak product tanker market, which led our company to post a net loss of $20.9 mill in the period. This was mainly due to an extended refinery maintenance season coupled with an overhang of tonnage built up during the spring and the summer period.
“We operate in a cyclical business and I do believe we are at the bottom of the cycle. It is always hard to indicate the exact timing for the next recovery, but I do believe it is just a matter of months before we will see again our market generating good returns. We are already seeing some positive signs going into the last quarter of the year.
“As I have been saying several times, the long-term fundamentals are all extremely positive, showing a growing world demand for oil-refined products and limited net fleet growth expected for the next years. In addition, the major regulatory change which will come into force in January 2020, limiting the sulfur content in bunker fuels, is widely expected to generate incremental demand for our vessels already starting in the second-half of 2019
“We are amongst the world leading companies in our sector, thanks to our strong commercial relationships with all the main oil majors and key industry players, to our top-quality standards on board and onshore, to our consolidated relationships with banks and financial institutions. Furthermore, we are proud to be part of the d’Amico Società di Navigazione Group, which is financially solid and has been continuously supporting DIS during this adverse market, through share capital increases, additional exercise of its warrants and direct loans.
“Our 22 ships newbuilding programme begun in 2012 is coming to an end, with the last two LR1s expected to be delivered at beginning of next year. I can confirm that all these vessels were ordered at historically low prices, which is really key in a capital intensive business as shipping is. I do believe DIS can look with confidence to the future as it is favourably positioned to capture the benefits of the next positive shipping cycle, with a modern fleet and a top-quality organisation, which I have been honoured to lead for over 11 years, out of my 22 years with the d’Amico Group.
“As already disclosed, I am stepping down as CEO of DIS at the end of the year and I am pleased to announce that our chairman, Paolo d’Amico, will be taking on my previous role. Paolo is one of the most prominent person in the tanker industry and I can think of no better person than him to guide and lead the company in these challenging times. I wish Paolo, the management team and you shareholders great success and a bright future,” he concluded.