By comparison, EBIT for 2Q14 was a negative $27 mill.
Results for the first six months of 2015 was $82 mill, compared with a negative $68 mill in 1H14.
The tanker division produced its best EBIT in its history at $33 mill for 2Q15.? ? Tanker earnings were 24% and 38%, respectively, above the 12 month T/C rates in Handysize and MR segments.
Despite a continued weak dry cargo market, better earnings were produced than expected at the start of the year. EBIT for the second quarter was $6 mill. The drycargo earnings were 45% above the average 12 month T/C rates and 84% above spot rates.
Cash flows from operating activities also strengthened to $65 mill in 2Q15.
The fall in ship values levelled off and entered an upward trend since the end of the quarter for both drycargo and tankers.
NORDEN raised its expectations for the 2015 EBIT result $70-100 mill, based on continued high tanker market rates.
”NORDEN has performed well during the first half of 2015. Our tanker business has utilised the particularly strong markets to generate its best quarterly operating result ever. At the same time, as a result of good coverage and sound business acumen, our drycargo business has made it decently through an otherwise historically poor first half-year for the drycargo market.
“The tanker market is expected to continue with high rates for the rest of the year, and on that background we raised the expectations for this years results, “ president and CEO Jan Rindbo said in comment.
In 2Q15, NORDEN had total short-term and long-term cash and cash equivalents of $110 mill, of which $95 mill are included in ‘Cash and cash equivalents with rate agreements of more than 3 months’.
Cash flows from operating activities amounted to $65 mill and in the quarter the company obtained proceeds from vessel sales of $87 mill. Cash flows from financing activities consisted solely of repayments of debt and amounted to a total of minus $11 mill.
At the end of the quarter, NORDEN had cash and securities totalling $340 mill, and to this can be added undrawn credit facilities of $402 mill. In comparison, there are outstanding net commitments related to the newbuilding programme after the sale of two Supramax newbuildings of $273 mill, due between 2015-2018.
This year, NORDEN has focused on optimising day-to-day commercial operations including improved fuel efficiency and cost-effective technical operations.
A programme was launched to ensure annual savings of $20 mill within three years, and so far this has resulted in future annual savings of more than $5 mill. At the same time, work continues to optimise fuel efficiency on board the vessels. At the start of the year, the objective was to improve fuel efficiency by 3%, and this initiative is still considered achievable.
In addition, NORDEN has been active within the purchase and sale of tonnage. NORDEN’s exposure to the challenging drycargo market conditions has regularly been adjusted. At the beginning of August, three newbuilding contracts with early delivery were sold, while two newbuildings with delivery in 2018/19 were contracted, which together with other initiatives have reduced the cost level of the newbuilding portfolio.
At the same time, the company has been able to lower long-term costs on chartered vessels by paying parts of the hire in advance.
In the tanker segment, besides the sale of two MRs at attractive prices, NORDEN has gained attractive charters of two MRs with delivery in 2018 and two LR1s with delivery in 2017. The charter of two LR1s is taking advantage of an opportunity, which was made possible due to the company’s strong relations with Japanese shipping companies.
NORDEN has launched the annual strategy process under the leadership of CEO Jan Rindbo.
A recurring feature of the strategy will be a focus on the areas, where the company already has a strong foothold. Under the banner ‘Focus and Simplicity’, the objective is to create the pre-conditions for allowing NORDEN to continue to develop and thereby supporting NORDEN’s vision to be ‘The preferred partner in global tramp shipping.’
As part of this strategy, a number of management functions have been combined.
To streamline and simplify the company, NORDEN has combined a number of management functions and as a result, has reduced the executive management team from five to three members with immediate effect.
Responsibility for the finance department, investor relations and corporate secretariat will be combined under executive vice president, Martin Badsted, who has been appointed CFO.
At the same time, responsibility for sale & purchase, as well as long-term charter procurement has been combined in a new unit - asset management, covering both drycargo and tankers. The responsibility for this department has gone to Henrik Lykkegaard Madsen, head of the projects department, who was appointed senior vice president.
The commercial operation of NORDEN’s tanker fleet is to continue without any changes in the Norient Product Pool under the management of pool CEO - Søren Huscher.
“With the changes we are consolidating a number of functions creating a more streamlined organisation. This will also have implications for the composition of the executive management,”said Jan Rindbo, NORDEN CEO.
As a consequence, CFO Michael Tønnes Jørgensen and executive vice president Lars Bagge Christensen are to resign. They will still be available for NORDEN during a short period of time after which they will be released from their duties.
”On behalf of the Board of Directors, I would like to thank Michael and Lars for their considerable contribution to NORDEN over the years. They have both had a positive influence on NORDEN’s development, but we are simplifying the organisation, which also necessitates adjustment of the management structure,”explained Klaus Nyborg, chairman.
The executive management team now consists of CEO Jan Rindbo, CFO Martin Badsted and executive vice president Ejner Kiel Bonderup.