John Fredriksen's Golden Ocean Group has had scrubber retrofits pushed back as China reels from the effects of the Covid-19 coronavirus.

The bulker owner said it has now completed 14 of 23 planned installations of exhaust gas cleaning systems on its capesize vessels.

"The completion dates for some of the remaining installations have currently been extended due to the impact of the coronavirus in China," it added.

It did not specify the length of delay.

In the fourth quarter it completed charter amendments for seven capes leased from Fredriksen's SFL Corporation, whereby SFL will fund the scrubber investments previously announced by the company in exchange for increased charter rates.

Of the virus' effect on the market, it said: "It is too early to forecast the potential impact of the coronavirus beyond the short-term and information being released from China does not provide a complete view of its current impact.

"However, it is unlikely that normal business operations will quickly resume. As a result, commodity-related supply chains may become disrupted, with some taking longer than others to return to normal."

Net profit soars

Net earnings in the final quarter of 2019 were $41m, up from $23.6m the year before.

Revenue was $245m from its 79 ships, versus $176m in 2018.

This increase was primarily driven by higher average freight rates on ships that were chartered in for trading in the spot market, it said.

In addition, strong fixtures in the third quarter of 2019 on our owned vessels going in to the fourth quarter contributed to higher rates on average compared with the third quarter.

The company achieved an average time charter equivalent rate of $21,668 per day in the fourth quarter, against $19,727 in the third.

Ebitda of $74m was ahead of consensus, Fearnley Securities said.

The dividend was reduced to $0.05 from $0.15 in the third quarter, reflecting a payout ratio of 19%.

"In our view a sensible move with capesize rates presently at $2,500 per day and likely reflecting the near term uncertainty," it added.

Annual profit fell to $37.18m from $84.53m in 2018.

Challenging market

Ola Lorentzon, chairman and interim chief executive, said Golden Ocean's solid performance continued in the fourth quarter despite a weakening rate environment.

"While the company's earnings potential has been demonstrated over the course of last year, the market is currently presenting a challenging scenario that will impact our results in the near term," he added.

"As the current market dynamic continues to unfold, our focus remains on maintaining efficient operations and a strong balance sheet and liquidity position."

Golden Ocean has now completed refinancing of a $284m loan facility that financed 15 vessels.

Chief financial officer Per Heiberg added: "During the fourth quarter of 2019, the company continued to enhance its financial profile through the refinancing of one of its loan facilities on attractive terms, rolling the current debt at par value and pushing maturities out in time.

"The company believes this demonstrates its standing in the lending community and the company's continued ability to source attractively priced capital, to the benefit of its shareholders."

Looking ahead, it said its results demonstrate the earnings potential of a modern, fuel-efficient fleet significantly weighted towards capesize vessels, "which we believe to be the segment with the greatest leverage to improving market conditions."

"Despite emergence of exogenous events like the tragedy that occurred at Vale’s iron ore operations in Brazil in 2019 and the spread of the new coronavirus at the start of 2020, we are confident of the medium to longer term development of dry bulk transportation demand," it added.