US-listed StealthGas has reported a narrow profit for the third quarter, despite the Covid-19 pandemic hurting global demand for the LPG carriers on its vessels.
The Harry Vafias-led company posted a reported net income of $800,000, reversing a $200,000 loss in the same period of last year.
Voyage revenue held up, rising 1.4% year-on-year to $37.1m, despite the company putting four small LPG ships and its sole aframax in dry dock in the period.
“StealthGas marked a quite satisfactory performance given that we operated in a rather difficult market,” company chairman Michael Joliffe said.
In September, the Greek company took delivery of the 7,500-cbm newbuilding Eco Alice (built 2020) and sold the 3,400-cbm Gas Nemesis II (built 2001) for further trading at an undisclosed price. Athens-based brokers reported the ship was sold to South Korean interests for $4.5m.
Trouble with B-Gas
Matters going forward will likely get worse after the insolvency last month of the Cypriot subsidiary of Copenhagen-based B-Gas, which had four StealthGas LPG carriers under long-term bareboat charters.
“Secured revenues going forward were reduced by quite a significant amount,” StealthGas chief executive Harry Vafias told analysts in a conference call.
Total contracted revenues from StealthGas' core fleet dropped to about $80m from $133m in the previous quarter, according to the company’s financial statements.
StealthGas share price dropped 7.6% in New York on Thursday to $2.31.
Redelivery of the vessel quartet that StealthGas previously had with B-Gas ran smoothly and one of them is already on a period charter, said Vafias, whose company has a fleet of 47 small LPG carriers, three product tankers and one aframax.
Unless markets improve, however, the impact will likely be negative. One of the redelivered ships, the 3,455-cbm Eco Corsair (ex-B Gas Sunrise, built 2014), was on a bareboat charter with B-Gas until December 2029.
The quartet was employed in Europe, thus increasing StealthGas’ exposure to one of the world’s regions most affected by the coronavirus downturn, where charterers are especially reluctant to commit to long-term charters.
Redelivery also stands to increase StealthGas’s operational costs, as three of the four vessels it had with B-Gas’ Cypriot arm switched to the spot market.
In a statement and letters to creditors that B-Gas issued last month, the Danish company said it had to force its Cypriot unit, now known as Bepalo LPG Shipping, into liquidation after one single client with four ships rejected a compromise that would allow the company to continue trading.
“Regretfully, this party has refused to entertain any form of discussion regarding deferral of charter hire,” Bepalo said.
Following poor freight rates as a result of the Covid-19 pandemic, Bepalo had proposed to defer part of its charter hire payments to owners by four months.
B-Gas stressed that the declaration of insolvency relates to Cyprus-based Bepalo only and that it continues managing nine ships out of Copenhagen.
“All vendors will be paid on time and in full, and business will continue as usual,” B-Gas said in the statement dated 13 October.
Lucy Hine contributed to this article
