Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Safe Bulkers Inc (SB, Financial) reported a stronger market compared to the previous year, leading to increased revenues.
- The company has implemented a new integrated management system in compliance with DryBMS Standards.
- Safe Bulkers Inc (SB) ordered two additional Phase 3 new builds, consistent with their fleet renewal strategy.
- The company issued a 2023 sustainability report detailing their ESG practices and future vision.
- Safe Bulkers Inc (SB) declared a dividend of $0.05 per share of common stock, rewarding shareholders.
Negative Points
- The geopolitical landscape, including tensions in the Middle East, Red Sea, and Ukraine, underscores heightened global uncertainty.
- Persistently elevated inflation has led central banks to become more cautious about policy easing, impacting market expectations.
- The dry bulk market is facing a tight supply picture, which could affect future growth.
- Higher interest rates have increased the company's interest expenses.
- The market is currently weak, particularly in the summer months, with expectations of improvement only in the fourth quarter.
Q & A Highlights
Q: What are your thoughts on the Cape fleet and potential investments given the current market conditions?
A: (Loukas Barmparis, President) Investing in Capesize newbuildings is currently not feasible due to high prices and interest rates. We may revisit this in the future if interest rates ease. For now, we focus on fleet renewal by selling older Capes to buy newer ones. (Polys Hajioannou, CEO) Our fleet has expanded significantly over the past two years, and we are not looking to invest further in Capes at this time due to high costs.
Q: Are there returns in the secondhand Capesize market that look interesting?
A: (Loukas Barmparis, President) Both new and secondhand Capes are currently too expensive. For example, an eight-year-old Capesize costs around $50 million, which is not a good investment for us at this point.
Q: What is driving the current dry bulk market, and do you expect any changes?
A: (Loukas Barmparis, President) The market is currently weak, which is typical for summer months. We expect improvement in the fourth quarter. The lack of congestion in major loading areas and weak Atlantic market have contributed to the current conditions. We anticipate a stronger Atlantic market in the autumn, which should lift rates. Environmental regulations will also impact the market, favoring younger ships.
Q: Can you provide commentary on the returns from environmental upgrades on your existing fleet?
A: (Polys Hajioannou, CEO) Our scrubber investment, completed in 2020, has already paid off. Current scrubber revenue is around $20 million annually. We reinvest this into environmental upgrades for our existing fleet, such as low friction paints, which have reduced fuel consumption and increased charter rates.
Q: Do you plan to dispose of older vessels given the recent upgrades and current asset pricing?
A: (Loukas Barmparis, President) We are not in a hurry to sell older vessels. We will sell at the right price and to the right buyer, but it will be a slow process over the next two to three years. We aim to balance fleet renewal with market conditions and buyer interest.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
