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Odfjell sees $75m of red ink in 2014, expects little respite in 2015

Odfjell sees $75m of red ink in 2014, expects little respite in 2015
Odfjell cut its full year loss to $75m in 2014, down from $108m in 2013 as it forecasts continued imbalance in the chemical tanker market.

The company expects the high orderbook, currently at around 30% of the world fleet, to maintain a supply and demand imbalance in the sector through 2015. Odfjell's bunker hedging also means that it will see limited benefit in 2015 from the fall in bunker prices.

While the price of heavy fuel oil was slashed in half during the quarter to $280 per tonne, Odfjell's bunker hedging meant it recorded a $16.6m loss related to the instruments during Q4.

EBIT for the chemical tankers business remained at $3m in 2014, despite a minor increase in revenues to $1bn. Odfjell expects improved profitability from its chemical tankers in 2015 as the cost base is lowered.

The company's gas carrier business, which is half-owned by private equity firms Breakwater Capital and Oak Hill, returned an $8m EBIT. Odfjell is committed to paying up to $50m towards the construction of eight LPG/Ethylene vessels, the last of which is due for delivery in 2017.

Odfjell's Rotterdam tank terminal, which has dampened the group's results from a number of years following safety and maintenance failures, as well as a shut down, is beginning to see positive indicators for the future. Gasoline contango has helped drive commercial occupancy to 90%. Capacity will continue to come back online in 2015, rising to 900,000 cu m during the year, from 550,000 cu m at the end of 2014.

On 9 January 2015 the company announced a restructuring, involving the loss of 86 staff at its head office, that it expects will save it $100m per year by the end of 2016. Provisions towards redundancies of $5.1m were made in the fourth quarter, with the total cost expected to be $12m. Termination of an early retirement scheme that allowed employees to retire at 65, as well as a change to the company's pension scheme, resulted in a $10.9m income in Q4.

In December 2014, the company's ceo Jan Hammer stepped down "due to different views on the strategic direction for the company."

The company is seeking refinancing for some of its facilities during the course of this year, "during the first and second quarter we will refinance a number of loans that matures late 2015. These refinancing’s will contribute positively to our cash holdings," its earnings release stated.

The company's total equity fell $120m in 2014 to $638m.