US-listed dry bulk player Diana Shipping says it will stick to its current policy course, as it awaits the Covid-19 triggered freight market crisis to blow over.
“In this challenging environment… we see no reason to change our strategy, which we will pursue steadily,” company president Anastasios Margaronis told analysts in a conference call with analysts to discuss 2019 earnings.
Diana will continue selling older tonnage and repurchasing company stock whenever circumstances are favorable, according to management.
“Sooner or later, we will reach the end of this process and the company will resume dividend payments, if the market allows,” Margaronis added.
Net loss attributed to common stockholders for 2019 amounted to $16.3m, compared with a profit of $10.8m in the previous year. The 2019 reading, however, includes a total $20.2m of losses related to impairments and vessel sales.
Time charter revenues dropped by just 2.4% last year to $220.7m, even though the company's fleet shrank to 42 units after it sold six of its oldest vessels.
That result vindicated its conservative chartering strategy, especially a decision to not invest in scrubbers, management said. “We are in a very favorable condition and we still can sustain this kind of environment very well, compared to the other companies that wasted most of their money on scrubbers,” Margaronis said.
Diana, however, did suffer some setbacks to its strategy. It announced selling two additional ships since January, one panamax and one capesize, only to see the transactions fail as buyers changed their minds amid the Covid-19 virus outbreak in China.
The company hasn’t made up its mind yet if it will try again to sell the ships on the second-hand market or if it would continue trading them, Margaronis and Diana chief executive Simeon Palios said during the call.
As for its stock buybacks, the company said it would continue them but not to the point of jeopardizing its “public nature”. Diana completed five such buybacks in 2019 and another one earlier this month.
According to TradeWinds calculations based on the company’s public announcements, Diana bought back a total 17.6 million common stock for a total $59m. The company had about 105 million common shares outstanding before these buybacks began in March 2019.
EPS downgrade
Investment bank Jefferies lowered its full-year 2020 and 2021 outlook on Diana Shipping to $0.13 loss per share from $0.06 and to $0.05 earnings per share (EPS) from $0.08.
"We are reducing our 2020 and 2021 EPS estimates to reflect recent time charters below our spot rate expectations as well as our increased G&A and vessel opex assumptions," analyst Randy Giveans wrote in a note to clients.
"Although most of the fleet is covered, our EPS estimates are based on DSX's remaining open capesize, kamsarmax, and panamax operating days being secured at daily spot charter rates of $13,500, $10,500 and $10,000 during 2020 and $16,000, $12,075, and $11,500 during 2021, respectively."
