Losses widened considerably in the first quarter at Navios Maritime Holdings, weighed down by falling freight rates and impairments incurred by a subsidiary that is under liquidation.
The US-listed company owner announced a net loss of $53.3m, a deeper deficit than the $5.3m in the same period last year.
The loss includes close to $30m in impairments from two unidentified bulkers, as well as from Navios Europe II, a vehicle in which Navios Holdings holds a 47.5% stake and which is to be dissolved by the end of the second quarter.
Revenue dropped by 16% to $91.1m.
Dry bulk vessel operations, in particular, saw revenue shrink by 35% to $34.3m, mainly due to a decline in freight and time-charter rates. The time-charter equivalent (TCE) earnings decreased by 26% from a year earlier, reaching $7,082 per day during the period.
Rates remain weak in the second quarter but should recover later this year, Navios Holdings chief executive Angeliki Frangou said, sticking to a similar estimate she made in February.
“We anticipate growth in the second half of the year as global economic activity returns,” Frangou said in the earnings statement on Thursday.
“We are seeing more economic activity and we see the rate environment improving. We are looking forward to an even better second half of the year, with iron ore being the driver of the market.”
Prospects are particularly good for Navios South American Logistics, a majority-owned subsidiary that is poised to expand, Navios Holdings management told analysts.
Meanwhile, Navios Holdings said it expects to soon recoup most of the impairment losses it incurred due to Navios Europe II.
The New York-listed company has receivables worth about $31.5m from the liquidation of the vehicle. Navios Holdings will “receive cash subject to working capital adjustments at closing and will acquire two unencumbered panamax bulkers”, the company said.
With a little help from the mother ship
To paper things over in the meantime, Navios Holdings lined up some financial help from Frangou's private company N Shipmanagement Acquisition Corp (NSM). Navios Holdings revealed in the earnings statement that NSM agreed earlier this week to provide Navios Holdings with a loan of up to $50m “to be used for general corporate purposes”.
The loan agreement will be repayable in 18 equal consecutive quarterly instalments from the initial drawdown. “Principal payments that fall due during the first year following the initial drawdown may be deferred, at the company’s [Navios Holdings] election, in whole or in part,” Navios Holdings said.
NSM provides the loan, no amount of which has been drawn yet, at an annual interest of 5%. This increases to 7% for principal amounts deferred.
Navios Holdings separately revealed it sold the 76,700-dwt panamax Navios Star (built 2002) last month, to an unrelated third party for $6.7m.
On the other hand, the company took delivery of two vessels — the 82,000-dwt Navios Magellan II (built 2020) and the 81,800-dwt Navios Galaxy II (built 2020) — it will operate under bareboat charter.
In March 2020, the Greek company acquired from an unrelated third party a previously chartered-in vessel, the 181,200-dwt Navios Corali (built 2015), for $36.6m. The acquisition was paid in cash and financed through a sale-and-leaseback transaction with an unrelated third party.
Navios Holdings did not announce dividends since it has suspended such quarterly payouts on its common stock as early as in February 2016.
Navios Holdings currently controls a fleet of 52 vessels totalling 5.6m dwt, of which 34 are owned and 18 are chartered in.
