German tonnage provider MPC Container Ships (MPCC) has massively upgraded its earnings expectations for the 2021 financial year on the back of a resurgent charter market.
The Oslo-listed feedership specialist is forecasting Ebitda of between $90m and $120m. That compares with $16.1m in the previous year and is approximately 30% higher than market expectations.
Revenues are slated to come in at between $200m and $240m — some 40% higher than the $170m logged in the previous year.
MPCC chief executive Constantin Baack said the company was benefiting from “ideal market dynamics”.
He said strong market momentum has pushed charter rates to 10-year highs while extending achievable charter periods.
That had enabled the company to secure a significant charter backlog of about $157m for the 2021 financial year.
“In the midst of these ideal market dynamics, the group has re-chartered out the majority of our fleet and will see more vessels coming open during the next months,” he said.
“As such, the group is accumulating a sizeable charter backlog and secured earnings.”
Rollercoaster ride
The improved earnings forecast caps a rollercoaster year for MPCC, which owns a fleet of 64 feeder containerships.
Baack said: “2020 proved unexpectedly volatile. But the V-shaped recovery during the latter half boded very well for the container shipping industry in particular.
“Tonnage providers such as MPCC are greatly benefiting from the sharp upturn in charter rates, albeit with a certain time lag as our customers exhausted their pre-recovery charterparties to their fullest.”
The company logged a loss of $18.4m in the fourth quarter of 2020.
The deficit was partly attributable to an impairment of $4.8m on the sale of two feeder vessels of between 1,000 teu and 1,200 teu.
Operating revenues, utilisation and Ebitda each improved in the final three months of 2020.
Utilisation rose to 97% and operating revenues increased to $45.6m.
Time-lag on charters
Norwegian investment bank Fearnley Securities noted that Ebitda of $4.5m in the fourth quarter was well below market expectations.
However, the shortfall is attributed to a time lag for the higher rates to feed into the charter market.
The analyst also expects the improved earnings will allow MPCC to deleverage.
“With charter market focus now increasingly tilted towards longer-term charters, our expectations are for MPCC to secure long-term employment for its upcoming fixtures,” Fearnley said.
It added that upcoming renewals this quarter include a number of sub-panamax vessels, which are presently earning less than $10,000 per day.
These could be expected to earn about double that for fixtures of a longer duration in the current market.
MPCC concluded 41 fixtures on the charter market between November and early February. Of these, 26 were below 2,000 teu.
A further nine charters are expected to be sealed during the rest of the first quarter, and 29 more in the second and third quarters.
MPCC recently sold three vessels with an average age of 16 years — the 996-teu AS Laguna (built 2008) and 1,200-teu AS Fiona and AS Frida (both built 2003) — that changed hands for a combined $12.7m.
The shipowner also paid $10m to acquire the 3,586-teu AS Nadia (ex-Nordspring, built 2007), which is now its biggest ship.
