As expected, Norden finished the first half of 2015 with a strong result that was, overall, driven by improvements in the tanker market.
CEO Jan Rindbo has the following comment on the result:
”Norden has performed well during the first half of 2015. Our Tanker business has utilised the particularly strong markets to generate its best quarterly operating result ever. At the same time, as a result of good coverage and sound business acumen, our Dry Cargo business has made it decently through an otherwise historically poor first half-year for the dry cargo market. The Tanker market is expected to continue with high rates for the rest of the year, and on that background we raise the expectations for this year’s result,” says the new CEO in the carrier's second quarter interim report, published Wednesday.
The combined result for the first half of 2015 came to a profit of USD 82 million, up from a deficit of USD 68 million in the same period last year, according to the second quarter interim report, published Wednesday.
Operating profit for the tanker division in the second quarter landed at USD 33 million. Tanker earnings finished 24 percent and 38 percent, respectively, above the 1-year T/C rates for Handysize and MR, notes the carrier.
Dry bulk under pressure
Additionally, dry cargo earnings reached 45 percent above average 1-year T/C rates and 84 percent above the spot rates, says Norden in the report. But the carrier stresses that the dry bulk market is still facing severe pressure
"The dry cargo market, however, continues to be very weak, and Norden's Dry Cargo Department generated an EBIT for the second quarter of USD 6 million (USD -18 million). The result from the Dry Cargo Department contains a positive one-off effect of USD 6 million received from a settlement of a dispute from 2010," says the carrier.
At the end of the second quarter, the company's cash and securities stood at USD 340 million, pus additional unused credit facilities totaling USD 402 million. In comparison, the carrier's net outstanding payments related to the newbuilding program, after the sale of 2 Supramax newbuildings, stands at USD 273 million, set to mature between 2015 and 2018.
243 ships in the water
Norden's active fleet at the end of the first half of the year counted 243 ships, a slight decline from 251 active vessels at the end of the first quarter. One newbuilding has been delivered to the carrier's core dry bulk fleet through a joint venture, and seven long-term charter vessels, with purchasing options, have been returned.
The carrier has also contracted a Supramax newbuilding and sold two newbuildings in the second quarter - and furthermore, Norden has contracted one Supramax newbuilding and sold another after the quarter was closed, which will result in a USD 3 million book loss. The carrier is working on additional fleet adjustments of that nature.
For tanker, the company has signed a deal for two MR and two LR1 vessels on long-term charter, one of which will join the core fleet due to an included purchasing option. The carrier has also sold two MR product tankers.