EBITDA fell to $2.3 mill from $4.2 mill, due to the reduction in TCE revenue and higher vessel operating costs in 1Q17.
After accounting for depreciation, interest expenses and other finance expenses, the loss after tax in 1Q17 was $0.2 mill, compared with a profit after tax of $1.5 mill for 1Q16.
Under the loan agreement, cash in excess of $6 mill will be used to pay down the loan facility. As the cash balance did not exceed $6 mill, there was no cash sweep for this quarter (cash sweep of $2.7 mill reported in 1Q16), in addition to the regular loan amortisation.
Between 31st March, 2016 and 31st March, 2017, equity decreased from $45.6 mill to $39.1 mill, as a result of the cumulative loss during the period. Consequently, the equity ratio decreased from 34.3% to 33% between the period.
During 1Q17, cash flow generated from operations was $1.3 mill ($3.8 mill in 1Q16) mainly from earnings by the two pools and timecharter income received for ‘Nordic Anne’, offset by payment of periodic interest expenses on the term loan. Nordic made a partial repayment of $1.7 mill ($4 mill, including a $2.7 mill cash sweep) on the term loan facility.
As at 31st March, 2017, cash and cash equivalents totalled $4.6 mill ($6.3 mill at 1Q16).
For 2017, the five Handysize tankers are expected to remain commercially deployed in the UPT Handy Pool and Hafnia Handy Pool, respectively. The current timecharter for the LR1 will expire in November, 2017, if the charterer does not exercise a one-year extension option. Nordic said it will explore further employment options during the second half of this year.
As indicated in the 2016 Annual Report, the projected TCE revenue from the five product tankers in the pools and the income from the LR1 are expected to be in the region of $25.5 – $28.5 mill. After accounting for operating expenditure budgeted by the respective technical managers, Nordic said that it expected EBITDA to be in the range of $8 – $11 mill, while the result before tax is expected to be between minus $1 mill to plus $1 mill. This 2017 forecast does not take into account any write-downs of vessels’ carrying values.
Expenses relating to the operation of vessels in 1Q17 went up slightly to $4 mill from $3.8 mill in 1Q16, mainly due to increased expenditure on spares and repairs of vessels.
Chairman, Knud Pontoppidan, commented: “In line with expectations the softer tanker market continued in the first quarter of 2017 with a decrease in TCE revenue from $8.5 mill in 1Q16 to $ 6.8 mill in 1Q17. First quarter of 2016 was the last strong quarter before the tanker market softened. This led to a close to zero result for 1Q17, compared to a profit of $1.5 mill for the same period last year.”