Hafnia Tankers finished the third quarter with a significantly improved result, from a deficit of USD 1.66 million last year to a USD 20.7 million profit for the third quarter this year. The combined result for the first nine months of the year came to USD 47.4 million, according to the carrier's interim report, published Wednesday. And CEO Mikael Skov is pleased with the result:
"The result reflects the strong phase the product tanker market has been through in the third quarter, with a high activity level. Transport patterns for almost all products have been rising, so we're very pleased," he tells ShippingWatch.
The significant activity in the refined oil product trade has, among other things, brought longer journeys for product tanker vessels, that is, more arbitrage trade, he explains. Competitors such as Scorpio Tankers have noted in their interim reports that activity has slowed down a bit in the beginning of the fourth quarter. Mikael Skov confirms this trend.
"We've hit a seasonally more quiet period, primarily due to the fact that we have been through seasonal shutdowns related to maintenance and so on. So this does not represent a fundamental change in the market," he says, and declines to go into further details about his projections for the full year.
In addition to the much improved result, the carrier more than doubled its revenue to USD 59.6 million in the third quarter of the year, up from USD 28.2 million in the same quarter last year.
This result is attributed to factors such as the low crude oil price, which puts the refineries to work and makes it more attractive to transport the oil further before it is used. The carrier notes in the interim report:
"The product tanker market continued to benefit from high refinery margins combined with generally high gasoline, middle distillate and naphtha demand. The volatility of oil prices has encouraged additional trading activity of oil and refined products, leading to increased ton-miles supporting the demand for product tankers in the third quarter of 2015."
The company's average spot rates for the quarter came to USD 31,750 per LR1 vessel, USD 23,300 for MR and USD 23,350 per SR vessel.
This fall the company has welcomed a series of new board members, including Jan Bech, formerly of Torm and Glenco, who has also bought a stake in the carrier. Esben Poulsen, chairman of Singapore Shipping Association, has joined the board in Singapore, while John Ridgway has come on board as consultant. He served as CEO of BP Shipping until 2015.
Fleet expansion fully financed
Hafnia Tankers' fleet was expanded in the past quarter with the delivery of Hafnia Malaca (SR vessel), Hafnia Soya (SR) and Hafnia Lene (MR), while the carrier in the fourth quarter expects to take delivery of an SR vessel as well as an MR, while one SR and MR vessels will be delivered in 2016, and one MR in 2017.
By the end of the third quarter, the company's fleet stood at 28 owned ships and six chartered vessels, and the orderbook counted nine newbuildings.
The company still has outstanding orders totaling USD 206.8 million, which Hafnia Tankers expects to cover with USD 179.9 million through credit facilities plus USD 113.2 million in equity.
Earlier this year Hafnia Tankers took the first steps toward an IPO on the New York Stock Exchange by filing a notice with the authorities in New York, though the carrier has yet to set a specific date.
Hafnia Tanker states in the interim report that the combined book value of the fleet, including newbuildings, comes to USD 1.103 billion.