Odfjell sees significant earnings upside for its chemical tankers
05/06/2018 10:25
OSLO, June 5 (Reuters) - Chemical tanker firm Odfjell
ODF.OL sees significant upside potential to its earnings ahead
as low-yielding contracts expire, new vessels are brought in and
market rates for transporting chemicals recovers, it said on
Tuesday.
In total, 18 of Odfjell's ships come off time-charter (TC)
contracts this year, out of a fleet of 83 vessels.
"We still have a positive margin on our TC vessels but some
years ago we had a contribution of $40 million-$50 million ...
Today there isn't much value in these TC contracts," Chief
Financial Officer Terje Iversen told investors on Tuesday.
"We are not in a rush to renew these contracts, we could
live without these vessels," he added.
In a high-case scenario, Odfjell estimated an annual
positive impact on earnings before interest, tax, depreciation
and amortisation (EBITDA) of $15 million if the vessels
contracts are renewed.
A mid-level scenario would give a boost of $9 million.
Odfjell is due to take delivery of 11 newbuildings this year
and next with significantly lower operating costs than its older
vessels, the CEO added.
On top this, Iversen expects a gradually recovery of the
chemical tanker market.
At 0920 GMT, Odfjell's shares traded 12 percent higher for
the day at 34.2 Norwegian crowns. It earlier hit a four-year
high of 37.2 crowns.
(Reporting by Ole Petter Skonnord, editing by Terje Solsvik)
((olepetter.skonnord@thomsonreuters.com; 0047 23 31 65 97;))