Concordia Maritime announces full 2012 year report

2012 was an eventful year. This was a year in which we moved another step closer to the open market, with five of our thirteen ships employed on the open market at year-end. We took delivery of one vessel and ordered two new ones, all three with the latest fuel-efficient design. We achieved a result before tax, excluding impairment, of SEK 41.6 (76.3) million for the full year. After the fleet’s book value was written down in this year’s six-month report, result before tax was SEK –369.4 million.
This was another strenuous year for tanker shipping. This was reflected in the fact that our P-MAX vessels employed on the open market generated an average income of just over USD 13,500 per day. Our fixed contracts continued to generate income of approx. USD 20,000 per day. Despite the weak market, we reported a relatively strong EBITDA of USD 33.7 (37.3) million for 2012.
Fourth quarter
Result after tax amounted to SEK 9.7 (25.9) million, while EBITDA was SEK 52.9 (61.2) million. Income from our P-MAX tankers in the open market was approx. USD 13,500 per day.
During the quarter, an agreement was signed on the financing of the two IMO II MAX product tankers ordered in June and scheduled for delivery in late 2014/early 2015.
The agreement, which is with SEB, is expected to be fully completed during the first quarter of 2013. In late December, an incident occurred in which Stena Primorsk ran aground near New York, resulting in some damage to the outer hull. The tanker underwent repairs and is back in service. Thanks to our insurance cover, which also includes loss of income, the results were only marginally affected by the incident.
Expectations for 2013
Our operations have undergone a gradual change over the last two years, moving from fixed income contract coverage for the entire fleet towards increasing exposure to the open market. As at February 2013, seven of our thirteen vessels are employed on the open market, and, as would be expected, the market’s short-term ups and downs are having a significant impact on our earnings and cash flow. We are employing vessels on the open market at this time because we want to avoid locking in earnings for long periods in this weak market cycle that has brought low time charter rates. In other words, with this positioning we see scope for better earnings both in the short and long term.
During 2013, we expect the market to gradually continue to strengthen. An improvement was seen towards the end of 2012 and this has continued into January and February. However, we do not believe that income from our open vessels during the year will reach the average levels of our remaining time charters.
Product tanker market’s long-term development
In addition to an improvement in the fundamental balance between supply and demand in the product tanker market, there are a number of driving forces of a structural nature. One example is the shift in refinery capacity from west to east. Another is price differentials between different markets which from time to time present arbitrage opportunities in the oil trade. This can lead to an increasing demand for transport. The product tanker segment is currently attracting significant interest from investors, particularly in the U.S., and is widely considered to be leading the recovery of the generally weak shipping markets. We share this assessment and believe that we are well positioned to exploit the opportunities created by a dynamic and changing product tanker market.
Source: Concordia Maritime