John Fredriksen’s Avance Gas is likely to improve profit further this year as VLGC rates continue to rise.
The Oslo-listed company said its average time charter equivalent (TCE) rate on a load-to-discharge basis was $58,379 per day in the first quarter, up from $46,478 in the fourth quarter of 2022.
This was slightly ahead of its own guidance of $58,000 per day.
In the first three months, time charter coverage stood at 41% at an average of $40,000 per day. Spot voyages came in at $71,000.
Daily operating expenses were only $8,626 per day, down from $8,738 in the final three months of 2022.
Chief executive Oystein Kalleklev said first quarter TCE figures have only ever been higher once, in 2015, at $65,000.
“Just like in 2015, the spot market for freight has been very strong this year and much firmer than most industry experts expected, as there were concerns about the numerous VLGCs scheduled for delivery this year,” he added.
“We have however seen significant slippage of newbuilds, a large portion of the VLGCs carrying out a special survey this year and this, coupled with elevated arbitrage in the price of LPG from US to Far East, has resulted in a high willingness to pay for freight which we have been able to capitalise on,” the CEO said.
Kalleklev said the company is guiding for very firm levels of $50,000 in the second quarter, when the company is “now basically fully booked.”
“We are now booking ships for voyages in the third quarter and with current spot rates at around $80,000 to $90,000 per day we remain upbeat about the prospects for also delivering healthy earnings in the second half of 2023,” he added.
Profit on the up
Net profit grew to $36.3m to 31 March, compared to $24.3m in the same period last year.
Revenue was $77m, versus $66.5m in 2022.
The dividend is $0.50 per share, or $38.3m.
The company believes it is in a very sound financial position, with $220m of cash available, and full financing in place for its remaining two newbuildings
