Odfjell returns to profit in 2016, eyes a 100-ship fleet

The full year 2016 profit was a reversal from the deficit of $36m in 2015, while revenue dropped slightly to $967m from $1.07bn.

For its shipping business in chemical tankers and gas carriers, Odfjell is anticipating a more balanced market in the long run as capacity is getting absorbed, though rates are expected to stay under pressure in 2017.

“Our markets remained challenging, but Odfjell continues to build both financial and operational strength. Based on our strengthened position we are now launching our new strategy - the Odfjell Compass - which will be leading the company into the future,” said Kristian Mørch, ceo of Odfjell.

The Odfjell Compass guiding strategy includes a focus on safety, maintaining chemical tankers and terminals as the core business, an average long term revenue growth of 10% per year, and a target to operate a fleet of 100 vessels.

At present, Odfjell operates a fleet of 77 ships comprising of 75 chemical tankers and two gas carriers. The group has newbuilding orders of four chemical tankers and four LPG/ethylene carriers. However due to delays in delivery by the troubled Chinese yard Nantong Sinopacific Offshore & Engineering for the four 22,000 cu m LPG/ethylene ships, Odfjell said it will most likely cancel the four orders when it is in a position to do so.

The shipowner has already cancelled orders for four 17,000 cu m LPG/ethylene carriers at the Chinese shipyard.

Odfjell’s tanker terminal business contributed to the profit of 2016 from the sale of the Oman terminal during the fourth quarter, resulting in a capital gain of $44m.

Looking ahead, the group expects Odfjell Terminals to see improved earnings on continued increased PID distillation activity and better storage results in the Rotterdam terminal.

“Economic growth continues, but we see an increased risk of growing protectionism on intercontinental trade and cooperation, which could potentially add risk to all shipping segment including the chemical tanker markets,” Odfjell stated.

The company pointed out that is completed a new unsecured bond issue of NOK700m ($84.5m) in January with maturity date in January 2021.

The net proceeds from the bond will be used for general corporate purposes, including part refinancing of existing bonds and potential future growth opportunities.

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