Pacific Basin Shipping finished 2020 at a loss during "a year of two halves" — and is now working on growing its fleet, having just purchased another ultramax bulker.
The Hong Kong-listed bulker company booked a $208.2m loss attributable to shareholders, compared with a $25.1m profit for the owner-operator in 2019.
Its net result for 2020 comprises an underlying loss of $19.4m plus massive asset impairments booked during the first half of the year, when bulker markets were at their weakest.
The impairments relate primarily to Pacific Basin's smallest and oldest handysize bulkers.
Pacific Basin chairman David Turnbull said in the firm's annual report: "2020 was a gruelling year in which global efforts to contain the Covid-19 pandemic affected the dry bulk freight market, posed practical challenges to our operations and had a real impact on our staff — our seafarers in particular."
The company said time-charter equivalent (TCE) earnings for its handysize fleet outperformed the benchmark market index by $1,140 per day during 2020, while supramaxes were boosted by $3,360 per day.
Its operated fleet generated a net margin of $1,080 per day over 15,500 operating days, which Pacific Basin described as "healthy".
Bad turns to good
As Pacific Basin called it, 2020 was "a year of two halves" — six months of dramatic losses and impairments followed by a rebound in markets.
Net profit during the second half of the year totalled $14.2m, which involved underlying profit of $7.2m.
The net profit reverses the $222.4m loss posted during the first six months, which included $198.2m in asset impairments.
Pacific Basin's TCE earnings were below break-even during the first half of the year, resulting in an underlying loss for the period.
Shopping around
The improved market means Pacific Basin has now turned its attention to growing its fleet.
Earlier this month, the firm acquired an ultramax bulker in the secondhand market for $13.5m but has not disclosed any further details.
In November, the company bought four 2015-built ultramaxes from Scorpio Bulkers, which has since been renamed Eneti, for $67m en bloc.
"On the back of the improving freight market, asset values have rebounded by around 15% since the lows of last year, so we consider our five recent ultramax acquisitions to have been well timed," chief executive Mats Berglund said during the company's conference call with analysts on Thursday.
All five vessels will be delivered into Pacific Basin's fleet during the first half of 2021.
"In particular, we have grown our supramax fleet, with the acquisition of ultramax vessels, and we continue to sell our smaller, older handysize vessels to trade up to newer handysizes with larger carrying capacity," Berglund said.
"Supramax and ultramax vessels offer a larger earnings upside in strong markets and this, combined with our overall growth, gives us really good leverage to the market improvements we are currently seeing."
In January, Berglund announced plans to retire from his position as Pacific Basin's executive director and chief executive.
Martin Fruergaard, the current chief executive of Ultragas, will succeed him as executive director from 2 July.
