Eagle Bulk Shipping's ability to secure higher rates than the rest of the supramax market last year would have been even better without the slew of scrubber retrofits on its vessels, according to its chief executive.
The New York-listed supramax and ultramax bulkers had 37 of its 50 ships in and out of yards last year to prepare for the IMO 2020 environmental regulations.
"There's no question that our outperformance was impacted significantly by the need to position 37 ships, 35 of which were into China, especially given the fact that the majority of our fleet — more than 50% typically — is in the Atlantic at any given time," Gary Vogel said on Thursday, during a fourth-quarter earnings call with analysts.
"Any time you don't have a hand to trade, it's going to impact that, so there's no question in our minds."
Nonetheless, the outperformance created $24m in earnings value for the company during a year that Vogel called "best ever", despite the lower number of available ships.
"If you were to speak to our commercial team, I think they'd say they had one hand tied behind their back for a significant number of the positions," he said.
Vogel said the company recorded a net timecharter average of $11,292 per day, beating the supramax sector by $1,430 per day or 15%.
For the full year, Eagle Bulk posted a net timecharter average of $10,385 per day, besting the supramax segment by $319 per day or 15%, he said.
Getting it done
Eagle Bulk pushed hard in its effort to get all 37 ships fitted with scrubbers by 1 January to prevent losing $5m in scrubber premiums on 10 ships in the period to 1 July.
"It doesn't come back," he said. "That is just effectively moving against the project."
Eagle Bulk had 18 ships in Chinese yards for scrubber retrofits for part of the fourth quarter but considers the project done, except for the final three ships to get scrubbers in the first quarter, Vogel said.
"Then we'll have this completely behind us, just looking on the revenue side," he said.
Eagle Bulk Shipping fell short of analyst consensus for the fourth quarter, primarily due to off-hire days incurred during the scrubber retrofit programme.
The supramax and ultramax specialist posted an $11.2m net loss for the last three months of 2019 on Wednesday, versus a $6.49m profit for the same period last year.
Those results translated into a $0.16 loss per share for the quarter, missing estimates by $0.12 and contrasting with $0.09 in earnings per share a year earlier.
