Freight markets for supramax and ultramax bulkers have seen a marked downturn over the past few weeks, but Belships should be able to keep returning cash to shareholders, according to its chief executive.
Average supramax rates hit an 11-year high of $39,860 per day on 21 October, but have since fallen by almost 40%, according to Baltic Exchange assessments.
Lars Christian Skarsgard told TradeWinds: "Steel production and exports are down so I think there lies the main reason. Next year's levels for an ultramax are still above $20,000 [per day], which would be twice our cash break-even so we wouldn't complain," he explained.
"Contract coverage for next quarter is almost done so it looks like strong results for Belships can continue, including dividends," he added.
This quarter, Belships has around 77% of its available vessel days booked at about $29,000 per day net. Its daily cash break-even is $10,500.
Looking to 2022, the shipowner said it has covered about 42% of vessel days in the next four quarters at about $25,500 net per day.
Commercial platform
On Friday, Belships reported bumper profit of $35.2m, its highest net result in over eight years.
This enabled the owner to distribute NOK 0.55 ($0.06) per share to shareholders, its second consecutive quarterly payment.
"The market was very strong and we took delivery of six new vessels during the quarter. Also, Lighthouse contributed with another record result," Skarsgard said.
Belships made net profit of $35.2m during the third quarter as freight markets for supramax and ultramax bulkers hit the highest levels since 2008.
The net result is a significant increase compared to the loss of $4.2m in the same period last year.
Lighthouse Navigation, Belships' in-house commercial platform that handles cargo trading, contributed $23.2m of Belships' third-quarter Ebitda of $57.1m.
Net freight revenue for owned vessels was $106m during the third quarter, compared with $43.7m a year ago.
Lighthouse Navigation, the in-house commercial platform that handles cargo trading, has proven to be Belships' secret weapon.
The platform, of which Belships owns 50.01%, became part of the company through the shipowner's merger with Frode Teigen's Lighthouse Group in early 2019.
The commercial platform was based in Bangkok up until 2020, when Belships added a new Lighthouse desk at its headquarters in Oslo.
Belships' expanded fleet, which now numbers 30 supramax and ultramax bulkers, meant it had 25% more active days compared to a year ago.
Beyond COP26
Belships reported its third-quarter results as the 2021 United Nations Climate Change Conference (COP26) was winding up and just ahead of the next meeting of the International Maritime Organization's Marine Environment Protection Committee.
Shipping has set a course for decarbonisation and — as some of the outcomes from COP26 have shown — pressure is building on bulker owners to be more green.
"We are supportive to governments taking action. Strong, clear and quick carbon regulation would be the best. I just hope it won't be vague and dragged out," Skarsgard said of Belships' stance.
"We have been focused on building the best possible fleet available today. And then we expect over the next couple of years to experiment into new fuel mixes and designs for newbuilds or retrofits," he said of Belships' strategy.
The company has largely opted for vessels of up to five years old or for newbuilding resales in its sale-and-purchase activity to date.
The owner has acquired 19 bulkers and sold six of its oldest ships over the past couple of years.
