Golden Ocean, the John Fredriksen-controlled dry bulk operator, headed by Ulrik Uhrenfeldt Andersen ended its second quarter with a net profit of USD 104 million, but the top chief is convinced the upturn won't end here. On the contrary, he thinks 2022 might deliver even better results.
The second quarter interim report, published at the end of last week, showed a more positive result for the dry bulk operator headquartered in Bermuda but noted on the Oslo Stock Exchange. A net result of USD 104 million on the bottom line stands in stark contrast to the same period last year where Golden Ocean booked a deficit of USD 41.2 million.
We would not be surprised if next year ends up being even better than 2021.
According to Ulrik Andersen, the positive trend has not yet peaked for the dry bulk carrier.
"We are bullish about the near term and expect Golden Ocean to deliver better results in Q3 and Q4 than the USD 104 million net profit announced today for Q2," Ulrik Andersen tells ShippingWatch.
He adds: "Looking into next year, the first quarter is usually the weakest, but still, the Cape FFAs are trading around USD 20,000 per day, which is well above our cash break-even of USD 13,800 per day. We would not be surprised if next year ends up being even better than 2021."
A combination of factors
The upturn in the dry bulk market is driven by a combination of several factors, says the Golden Ocean CEO.
"The main ones being increasing demand across all dry bulk commodities, and Brazil’s iron ore export, which is long-haul, is increasing as is usually the case in the second half of the year. In addition, congestion is unusually high. Currently, around 16 percent of the Cape fleet is waiting at ports or anchorages around the world," says Andersen before adding:
"To a large extent, Covid is the main culprit causing delays, as vessels are quarantining, diverting for crew change, ports have reduced handling capacity and so on. We do not see the congestion unwinding anytime soon, and certainly not this year."
We have already made a timely fleet expansion. That said, we are not ruling out expanding further.
Although Andersen, who took the top spot in April last year, has had a tough start in the dry bulk sector, he points to timely investments in expanding the company's fleet. He says that by acquiring 18 modern vessels in February, the company expanded its fleet by 23 percent.
On the question as to whether this upturn would lead to other purchases, the CEO tells ShippingWatch that he cannot rule it out.
"We have already made a timely fleet expansion. That said, we are not ruling out expanding further if we can find accretive deals," he says.
Analyst immensely optimistic
ShippingWatch recently reached out to Joakim Hannisdahl, Head of Research at Cleaves Securities, for his insights into the dry bulk market and for his forecast of the market going forward. The Norwegian was immensely positive about the outlook.
"We believe that the dry bulk market will continue to be strong and expect that the Capesize segment will return its historic premium earnings compared to smaller segments. The orderbook is currently at 5.6 percent relative to the fleet, so prospects are looking very bright until at least 2024," he told ShippingWatch then.
Ulrik Andersen says that he has made note of the analysts' activities in increasing freight estimates and also Golden Ocean's price target on several occasions over the last few months, but that he leaves the forecasting to others.
"But we are optimistic that there is room for the rates to go higher as demand growth looks set to outpace the supply growth until at least 2023. It should support a continued strong freight environment," he concludes.
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