- Time Charter Earnings: USD 215 million, up USD 20 million from the previous quarter.
- EBIT: USD 107 million, compared to USD 89 million in the first quarter.
- Net Result: USD 88 million, adjusted for one-off items, compared to USD 69 million in the first quarter.
- Net Result from Odfjell Tankers Terminals: USD 2.9 million, compared to USD 3.2 million in the previous quarter.
- EBITDA: USD 147.2 million, up from USD 126.8 million in the first quarter.
- Depreciation: USD 39.9 million, slightly up from the first quarter.
- Net Interest Expenses: USD 19.1 million, stable compared to the first quarter.
- Cash Flow from Operations: USD 108 million, up from USD 91 million in the first quarter.
- Cash Flow from Investing Activities: Negative USD 17.5 million.
- Cash Flow from Financial Activities: Negative USD 36.6 million.
- Free Cash Flow: USD 91 million for the quarter.
- Available Cash: USD 231 million, including undrawn loan facilities.
- Equity Ratio: 51%, adjusted for IFRS 16-related debt.
- Dividend: USD 1 per share based on adjusted first half results.
- Contract Rate Increase: 5% on renewed contracts, covering 6% of total contract volumes.
- Carbon Intensity: 7.05, slightly down from the first quarter.
- Commercial Occupancy Rate for Terminals: 96.9%.
- Operating Expenses: Increased from USD 49.1 million to USD 51 million.
- Cash Breakeven: USD 22,103 per day, down from USD 22,501 in the first quarter.
- Total Assets: Around USD 2 billion.
- Total Interest-Bearing Debt: USD 787 million.
Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Odfjell SE (FRA:O7F1, Financial) reported a record quarterly net result of USD 88 million, adjusted for one-off items, compared to USD 69 million in the first quarter.
- The company saw an increase in time charter earnings to USD 215 million, up USD 20 million from the first quarter.
- Safety performance remains strong with all safety-related KPIs well within target and no serious incidents during the quarter.
- The Board approved a dividend of USD 1 per share based on adjusted first half results.
- Odfjell SE (FRA:O7F1) has a solid balance sheet with an equity ratio of 51% and available cash of USD 231 million, including undrawn loan facilities.
Negative Points
- Operating expenses increased slightly from USD 49.1 million to USD 51 million due to higher insurance costs.
- Net result contribution from Odfjell Tankers Terminals decreased to USD 2.9 million from USD 3.2 million in the previous quarter.
- The company experienced a slight decrease in activity levels at its Houston terminal.
- The carbon intensity reduction was marginal, moving from 7.1 to 7.05.
- The company anticipates that the next quarter will be strong but slightly lower than the record results of the current quarter.
Q & A Highlights
Q: This is Jørgen Lian from DNB Markets. A fantastic quarter. Still a very strong market. You now have 17 vessels in the order book. Just wanted to ask your thoughts about the need for further vessels going forward and how you view both fleet renewal and also potentially growth?
A: First of all, I would say that we are extremely happy with our cooperation with these Japanese tonnage providers. We have a good cooperation. And I would say that the rates on those contracts are favorable. If you look into the details of what we have on order in Japan, it's mainly traditional tonnage and not so much the super-segregators. In Odfjell, we today have 11 canal close vessels that reaching certain ages. And we also have to look at the super segregator segment. And if we do anything on -- within that segment, I think it will be for (inaudible) and not through external tonnage providers. So we at -- we are looking at two different segments when we are discussing this. For traditional commodity tonnage, we are extremely happy with what we see in Japan. And when it comes to the really specialized tonnage then it will be our preference to do that on our own book.
Q: And on the market more in general, there's been somewhat of a sell-off in the equity markets, recession risks picking up. Do you get any feedback from the customers in that regard, given the summer slowdown and the expected pickup going forward?
A: Well then we have to look at the nominations that we receive from the nominations on the contracts, the volumes that they actually put onboard of our ships. And I think the slide that I showed you in many ways speak for themselves. We are servicing an extremely industrialized market. And those volumes continue to go slightly independent of what traders and others are thinking. So we are delivering building blocks that the world needs every day. So we remain optimistic, but of course, I read the newspapers myself, so there is clearly a nervousness in the market. And I think you also have to take into consideration what we've seen in Europe, where volumes have been slightly reduced to the benefit of producers in the U.S. and Middle East. So I would say that in our segment, volumes are stable, but -- or in our market, volumes are stable, but we see that the trading patterns are changing somewhat.
Q: Can you provide more details on the financial performance and cash flow development for the quarter?
A: We saw that the time charter earnings increased to USD215 million, actually up USD20 million compared to the first quarter. Main reason for that is that we saw improved spot rates and also improved contract rates while a number of days and the volumes were quite stable compared to the first quarter. Time charter expenses being time charter -- short-term time charter vessels decreased or increased slightly to USD3.4 million due to less off-hire days and also on renewed rate for one of the vessels while operating expenses increased slightly from USD49.1 million to USD51 million this quarter. Main reason is that we had a bit higher insurance costs this quarter compared to the first quarter. Share of net results from joint ventures associated with new venture is our net result from the Terminal business under that USD2.9 million compared to USD3.2 million in the first quarter. Main reason for the slight decrease is somewhat lower result at our Terminals in the US. G&A decreased compared to the first quarter, but that's mainly due to seasonal reasons being that we actually -- we expand salary throughout 11 months instead of 12 months, meaning that units were at kind of free in our accounts in the June than reducing the G&A in the second quarter compared to average quarters. Then we ended with an EBITDA of USD147.2 million, up from USD126.8 million in the first quarter. Depreciation slightly up USD39.9 million and that gives us an EBIT of USD107.4 million compared to USD88.5 million in the first quarter. Net interest expenses quite stable compared to the first quarter, USD19.1 million and after other financial items and taxes, we underdone, as Harald said, with a net result of USD88.2 million, which is a new record compared to the last record in the first quarter of USD67.8 million. Adjusting for very few nonrecurring items, we underdone at USD88 million in net result compared to USD69 million in the first quarter.
Q: What are your thoughts on the current geopolitical tensions and their impact on your operations?
A: Yes, we've been through Panama a couple of times already, but I would say that maybe our biggest focus these days is geopolitical tension. We see that the situation in the Red Sea and Gulf of Aden is nowhere near an immediate solution. And we also see that the situation is not at all improving between Russia and Ukraine. So we anticipate that we will still have high political tension -- geopolitical tension going forward. The growth in GDP is forecasted at 3.2% in 2024 and that is one of the main KPIs for -- to estimate the chemical market going forward. So we see that there is a soft lending within reach. The growth in China has picked up somewhat, but it's still slower than what was expected at the start of the year. And in line with the growth in GDP, we foresee that the global chemical production will grow by approximately 3% this year. We also see that the summer slowdown is now coming to an end and activity is gradually picking up among our customers. So all in all, a development on the production side as normal, there have been a slight decrease in ton mile production due to the reopening of the Panama Canal, but we still anticipate that we will have to sail through -- sorry, around Africa in the months to come.
Q: Can you elaborate on the operational performance and market outlook for the next quarter?
A: We saw a very strong second quarter and trade disruptions continued to affect our market. We now see that the Panama Canal is returning to maximum capacity, and the canal is today around 90%. The Clarksons Index increased with 2.5% during the quarter, while the ODFIX spot index ended up 10.5%. If you look at the Panama Canal graph, we will see that the transits were at absolutely low during February and March and those vessels transiting the canal, were those that were that had no other options, those with ports just on the other side of the canal. For the long-range vessels, those transiting the Pacific, those vessels were all going the other way across the Atlantic and The Indian Ocean and then to the Far East. That situation is more or less solved today and we are back to normal operation for the super-segregators. And that is, of course, slightly reducing the ton mile demand. We have now increased our contract rates for 13 consecutive quarters. This quarter, we renewed 6% of our volumes. And on average,
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
