Nordic Shipholding suffers in declining market

Nov 24 2017

Nordic Shipholding suffered a loss after tax of $2.2 mill in the first nine months of this year, compared to a profit of $1.4 mill in the same period last year, or a loss after tax of $3.7 mill after accounting for a one-off impairment loss of $5.1 mill.

No impairment loss was recognised this year, the company said.

Since 2016, the weakening market has continued to impact the tanker industry and as a result, TCE revenue fell to $18 mill during the period, compared to $22 mill for the nine months ended 30 September 2016. 

The reduction in profit of $3.6 mill was mainly attributable to the lower tanker TCE revenue from the vessels deployed in the two pools. Loss of earnings arising from the drydocking of ‘Nordic Hanne’ in June, 2017 also contributed to the decrease.

EBITDA fell to $5.4 mill, compared to $9.2 mill, primarily due to the reduction in TCE revenue in the first nine months of 2017.

The Group did not make any impairment nor reversal of impairment during the 9M 2017 (impairment loss of USD 5.1 million in 9M 2016).  But development is monitored closely due to market uncertainties.

Under the company’s loan agreement, cash in excess of $6 mill will be used to pay down the loan facility. However, as the cash balance did not reach this level, there was no cash sweep for the period under review. For the same period of 2016, there was a cash sweep of $2.7 mill.

Between 30th September, 2016 to 30th September, 2017, equity decreased from $40.5 mill to $37.2 mill, as a result of the cumulative loss during the period. Consequently, the equity ratio decreased marginally from 32.9% to 32.3% between the two dates

In the first nine months of this year, cash flow generated from operations was $3.2 mill, compared to $6 mill in the 2016 period, mainly derived from earnings by the two pools and timecharter income received for ‘Nordic Anne’, offset by payment of periodic interest expenses on the term loan. 

During the period, Nordic Shipholding invested $1.2 mill in drydocking. The Group also made a partial repayment of $3.5 mill on the term loan facility.

Cash and cash equivalents stood at $3.5 mill, a reduction of $2.5 mill from 30th September, 2016. The reduction was again due to lower TCE earnings during the period.

Operationally, the five Handysize tankers are expected to remain commercially deployed in the UPT Handy Pool (three vessels) and Hafnia Handy Pool (two vessels), respectively. The LR1 ‘Nordic Anne’, which was redelivered upon the completion of the three-year time charter in October, 2017, re-joined the Straits Tankers Pool.

Given the current markets’ soft sentiments, the Board has revised downwards the outlook for 2017 against the guidance indicated in the interim report in the first half of this year.

EBITDA is expected to be in the range of $5 mill –$8 mill, a reduction of $1 mill. The result before tax is expected to be between minus $4.5 mill and minus $2.5 mill, again an decrease of $1 mill.

This revised outlook for 2017 does not take into account any impairment of vessels’ carrying values, the company said.

The Board will look at growth and consolidation opportunities that are accretive to the Company.  

Previous: Ship Finance continues fleet renewal programme

Next: SCF’s offshore and gas sectors offset dismal tanker results

October 2018

Who will replace lost Iranian exports- Interview with AET about the benefits of Singapore - ballast water - underwater ship inspections