Ardmore Shipping remained in the red for the first three months of 2021, but sees improved rates as an indication of recovery for the ailing tanker market.
For the first three months of the year, the Irish product tanker owner reported its third consecutive quarterly loss of $8.5m, up from a $6.5m profit for the same period in 2020.
During the quarter, the MR tanker specialist saw its average time charter equivalent rate jump to $11,349 per day versus $9,600 per day in the fourth quarter, while the company's fleet fetches roughly $11,000 per day in the second quarter with half of all revenue days booked.
"The rate improvements are modest and only the first step toward a full recovery, but the increased market activity is significant," chief executive Anthony Gurnee said in the company's earnings report.
"Oil demand remains below pre-pandemic levels, largely due to reduced air travel, and given that the timing of a full oil demand recovery is uncertain, we remain focused on risk management and financial strength."
The loss was $0.26 on a per-share basis, slightly better than analyst consensus of $0.31 per-share loss, according to Yahoo Finance.
For the quarter, Ardmore brought in $45.6m in revenue, down from $65.2m year-over-year.
The company reported that its decision to fix four product tankers on time charters versus none in the first quarter last year boosted revenue $2.2m, which was wiped out by the $2.5m drag on revenue thanks to loss of spot market revenue days.
The remainder of the drop was due to depressed rates.
Voyage expenses dropped slightly from $23.7m to $20.4m due to bunker prices while vessel operating expenses dropped from $15.7m to $14.5m "due to the timing of vessel operating expenses", the company said.
Like others in the tanker sector — which continues to falter in comparison to other parts of the shipping industry thanks to the Covid-19 pandemic — Gurnee pitched the outlook as "bullish".
Newbuilding slots are now being taken up by gas carriers, containerships and bulkers, making tanker orders even more expensive with delivery further down the line "thus further curtailing supply growth".
"We believe the prospects for the tanker and chemical tanker markets are very positive," he said.
"While oil demand growth will eventually slow in the coming years, the transition away from fossil fuels will take time and, meanwhile, product tanker tonne-mile demand growth will be supported by new routes and more complex trading patterns."
