Navios Maritime Partners maintained its dividend amid the coronavirus pandemic but warned investors they should not take further payouts for granted.
The Angeliki Frangou-led owner of bulkers and containerships stuck on Wednesday to a dividend payment of $0.30 per share, despite posting a net loss of $10.7m for the quarter, including a $6.9m impairment from the dissolution of a subsidiary.
The loss marks deeper red ink compared to the same period last year, when the New York-listed shipowner logged a loss of $9.5m that included a $7.3m impairment loss from the sale of a vessel.
Despite holding the line on its dividend, Navios Partners inserted a cautionary statement that it did not use in past earnings statements.
“The declaration and payment of any further dividends remain subject to the discretion of the board of directors,” the Navios Maritime Holdings spinoff said.
"[The payout] will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations, and such other factors as the board of directors may deem advisable.”
The US-listed limited partnership had hiked its quarterly cash distribution to $0.30 per common unit in the second quarter of 2019, which was an increase from $0.02 at the time.
Asked in a conference call with analysts on future cash distributions, Frangou said: "As in every quarter, the board makes a decision... we all know that the spot market is a difficult market".
Frangou added, however, that she expected a recovery in the second half of the year as countries emerge from quarantine.
Pandemic pain
For the moment, shipping markets are still in the downturn. “The pandemic’s effect on global economic activity is evident in charter rates,” she said in the press release on 13 May.
Navios Partners, which has an active fleet of 36 bulkers and 10 containerships, posted revenue of $46.5m in the quarter, slightly below the $46.8m it earned in the same period last year.
Revenue stagnated even though the number of days available for trading surged by 25% in the period, as Navios Partners' active fleet increased to 46 from 37 vessels.
The company would have posted a loss even excluding a one-off impairment charge of $6.9m, which is related to the recent dissolution of Navios Europe II.
Navios Partners owned a 5% stake in Navios Europe II, a special purpose vehicle with seven containerships and as many dry bulk vessels. The ships of Navios Europe II will be distributed among different Navios companies and Navios Partners expects to receive "cash and steel value” worth $17.3m from Navios Europe II's dissolution within the second quarter.
The Navios group holds at least some of Navios Europe II's vessels for sale.
Navios Partners is a limited partnership - just one in an array of Frangou companies listed in New York. 18.5% of Navios Partners is owned by Navios Maritime Holdings, another listed entity, and 2% by Navios Shipmanagement (NSM). The remaining 79.5% of Navios Partners belong to common unitholders.
Navios Partners owns 100% of its 46 ships, which will increase to 48 next year, when two chartered-in kamsarmax newbuildings will be delivered to the company. Navios Partners also owns a 33.5% stake in Navios Maritime Containers, a separately listed outfit with 29 boxships.
Navios Partners said in the press release it has currently contracted out 84.6% of its fleet’s available trading days for 2020, 36.9% for 2021 and 16.3% for 2022. That includes index-linked charters.
