OSG sees sustained recovery on the way

May 11 2018

Jones Act tanker and ATB owner, Overseas Shipholding Group (OSG) reported net income for the first quarter of this year of $3.7 mill, compared with $5.4 mill in 1Q17.

Shipping revenues for the first quarter 2018 were $101 mill, down 6.6% compared with the same period in 2017. TCE revenues for 1Q18 were $88.8 mill, down 13.2% compared with 1Q17.

By comparison, shipping revenues and TCE revenues increased 8.9% and 7.3%, respectively, over the fourth quarter of 2017.

First quarter 2018 adjusted EBITDA was $26.3 mill, down 27.3% from $36.2 mill reported in 1Q17. Adjusted EBITDA increased 15.6% from 4Q17.

As of 31st March, the total cash was $111.7 mill. Prepayments of $75.2 mill were made during the quarter for the company’s OBS term loan.

CEO Sam Norton, said, “We saw marked improvement in our financial performance during the just completed quarter compared to the fourth quarter of 2017. Rising spot market rates, higher utilisation rates, a renewal of timecharter activity, and a rebound in our niche market businesses to historical norms, all contributed to the improved results.

“We now have greater confidence that we have seen the bottom of the market for spot and timecharter rates and that a sustained recovery in our conventional Jones Act trades is now well underway,” he claimed.

The decrease in shipping revenues in 1Q18 reflected weakened market conditions,  two vessels less in operation, when compared to 1Q17 and a growing proportion of the company's fleet becoming exposed to the spot markets.

During 1Q18, market conditions firmed in comparison to 4Q17, resulting in higher TCE day rates for OSG’s product tankers operating in the spot market. Similar conditions occurred in ATB spot market rates; however, the benefit was reduced as utilisation remained a challenge, the company said.


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