Danaos downbeat on boxship charter market, still feeling impact of Hanjin bankruptcy

Reporting a 43.6% drop in net profit for the first half of 2017 Danaos was downbeat on the containership charter market.

“The charter market is moving sideways at levels slightly above the lows of 2016 but we have not yet seen a meaningful improvement to signal a market recovery,” Danaos ceo John Coustas said.

“Box rates have improved as a result of improved capacity deployment through the alliances and the recent industry consolidation activity has reduced our counterparty risks.

“On the other hand, consolidation in the liner industry combined with legacy newbuilding orders for large vessels still to be delivered is anticipated to maintain pressure on charter rates for a considerable amount of time,” he forecast.

Danaos’ financial results continue to be hit by the bankruptcy of Hanjin Shipping at the end of August last year. Adjusted net profit for H1 2017 was $53.6m compared to $88.8m a year earlier. Revenues were $223.9m in H1 2017 compared to $274.5m in the corresponding period a year earlier.

"Our earnings for the second quarter of 2017 continue to reflect the effect of the Hanjin bankruptcy on the company's financial performance,” Coustas commented.

Danaos had $560m exposure to Hanjin with eight vessels on charter to the Korean container line.

The collapse of Hanjin also caused the breach of loan covenants by Danaos and the company is in discussions on amendments as part of a larger refinancing of all debt maturing in 2018.

“In the meantime, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortisation and interest payments under the original terms of our debt agreements,” he said.