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Newly merged Golden Ocean stays in the red in Q2

Newly merged Golden Ocean stays in the red in Q2
The merger of John Fredriksen’s Golden Ocean with Knightsbridge failed to bring the company out of the red in the second quarter as the poor dry bulk market took its toll.

The company reported a second quarter loss of $35.5m compared to a $6.3m profit in the same period a year earlier. “The fall in earnings is primarily attributable to the continued poor market combined with an increase in the size of the fleet following the merger of Knightsbridge and the former Golden Ocean on 31 March 2015,” the company said.

As of 30 June 2015 the company had 23 newbuildings on order including having sold four, which have been sold. Golden Ocean committed to make $278.9m in installment payments on its newbuildings this year.

Commenting on the state of the market in the second quarter Golden Ocean said: “The spot market in the second quarter of 2015 did not give owners of dry bulk vessels any relief. Rates ended up more or less at similar levels as in the pervious quarter and with limited volatility.”

While optimism had improved at the start of the third quarter with capesize rates touching $20,000 day this has quickly fallen back given China’s economic woes. “Then a three step devaluation by the Chinese Central Bank and a very nervous Chinese stock market removed all signs of optimism over a fortnight,” the company commented.

Looking ahead Golden Ocean said: "Short term this could be painful for owners of dry bulk assets, but in a longer term perspective the supply side should repair itself faster than previously anticipated.

“Furthermore the board and management believe the company, with a modern fleet and healthy balance sheet is in a good position relative to most competitors.”