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Golden Ocean loses $135m in Q4, flags 'disappearing companies' and consolidation

Golden Ocean loses $135m in Q4, flags 'disappearing companies' and consolidation
Golden Ocean Group Limited (GOGL) today announced a $135m loss for the fourth quarter 2014, bringing to an end prospects of about breaking even as it reported a $135.6m full year deficit.

Asset prices have tumbled as the Baltic Dry Index (BDI) plummeted late last year, reaching an all time low in early 2015. GOGL suffered $183.3m in vessel impairments during the fourth quarter as capesizes lost 12% of their value in the fourth quarter alone.

After stressing its strong cash position, the company looked the the possible impact of a continued market slump: "Should the weak market continue this will force changes on the industry, some participants will disappear, and it will open for consolidation and for those that have stamina to stand through this period there will be opportunities.

"During a period with a weak market we expect to see increased scrapping, postponed orders, cancellations and conversions, and in the long run this will cater for better fundamentals for an upturn in the future." Capesize scrapping in the first six weeks was high, at a a level comparable to half of what was scrapped in the whole of 2014, with 19 vessels sold for demolition.

GOGL and Knightsbridge will discuss their proposed merger at special general meetings on 26 March, with the merger closing by the end of March should approval and documentation go to plan.

"After completion of the merger we expect that the combined company should be in a position to seek further consolidation opportunities in the dry bulk market," the company stated.

Operating revenues were down to $53m in the fourth quarter from $70.9m in the same period 2013, and down to $253.4m for 2014 from $308.9m in 2013. GOGL repeated analysts sentiments that the spot market will be broadly in line with 2014 for the next year.