Okeanis Eco Tankers (OET) has postponed paying its first dividend due to the uncertainty surrounding the coronavirus outbreak.
The Greek tanker owner had hoped to start paying dividends in the first quarter of 2020 on the back of the strong tanker market.
However, it said three conditions it had set for the implementation of a sustainable dividend policy had “not yet been satisfied”.
It said that reserves had “not yet built up” as the company had used initial cash flows from the strong market to pay down payables.
It said it also had near term capital requirements of around $10m to complete its scrubber retrofit program and to carry out the first special surveys on its three 2015-built aframaxes.
Finally, it said the initial strong market did not hold and that the short term outlook was now “highly uncertain”.
“We remain fully committed to returning capital to shareholders, but believe that the global market reaction to the coronavirus justifies a prudential, short-term response,” it said.
“If the coronavirus develops into a global pandemic, then a capital buffer will be crucial in navigating the subsequent challenging market.
“If the virus is brought under control, then any excess cash build-up will immediately be returned to shareholders when the market stabilizes.”
However, it did say that the coronavirus did have a "silver lining" for companies like OET with eco, scrubber-fitted tankers on the water.
"Newbuilding orders have come to a complete standstill and scrubber retrofits in Chinese yards face massive delays," it said.
Turns around loss
News of the dividend postponement came as the company reported a fourth quarter profit of $17.7m, reversing a year ago loss of $700,000.
Time charter equivalent (TCE) revenue for the quarter was $49.5m as its fleetwide daily TCE rate equalled $41,700 per operating day.
OET’s fleet of VLCCs, suezmaxes and aframax earned average TCE rates during the quarter of $38,400, $49,500 and $41,200 per operating day, respectively.
Looking ahead, the company said in the first quarter to date 77% of the available VLCC spot days have been booked at an average TCE rate of $100,200 per day.
Fearnley Securities said Ebitda of $39m and earnings per share of 55 cents were ahead of both its own estimate and the consensus.
Spot TCEs of $63,800 for VLCCs and $62,100 for suezmaxes were 4% and 44% ahead of the industry average, it added.
First quarter bookings are 13% above peers that have reported so far, Fearnley said.
Assuming current earnings of about $40,000 for a VLCC and $30,000 for a suezmax, it would expect Ebitda of $60m in the first quarter.
Fearnley said the dividend move was "disappointing", but it can understand the decision to preserve cash should the market become even worse.
