London-listed shipping fund Tufton Oceanic Assets is lining up a big one-off payment to shareholders after a strong finish to 2023.
The owner of 10 product tankers, nine bulkers, two chemical tankers and an LPG carrier said net earnings in the six months to 31 December were $37.3m, from a loss of $4.2m a year ago.
Revenue climbed to $60.8m, versus $57m in 2022.
Chairman Rob King said the result was driven by strong portfolio operating profit and asset value gains.
The annual dividend target will now be increased by 17.6% from $0.085 per share to $0.10 per share.
And the board is evaluating a proposed one-off return of capital in the second quarter of between 5% and 10% of its $427m net asset value — a handout potentially worth nearly $43m.
The shipping fund has also set a higher bar for new vessel investments.
Returns over a three-year holding period will be compared to the benefit of returning money to investors.
Cash could be handed back to shareholders if no deal is entered into.
A strategy review in January envisaged Tufton winding up the fund by 2030, selling all its ships, with the potential for a new company to be set up to invest in the energy transition.
The company said key drivers for a recovery in tankers and bulk carriers led by tight ship supply remain as the industry slowly transitions to zero-carbon fuels to meet tightening regulations and decarbonisation targets.
High fixing rates
“We expect that these drivers will continue to support high yields and secondhand vessel values over the next decade,” Tufton added.
The fund benefited from high fixed-rate time charters on its MR product tankers during the entire six-month period.
There was also a strong chemical tanker market.
Tufton logged a charter-free value gain of $4.7m as rising product tanker values outweighed the effect of lower bulker values.
There was also a charter value gain of $2.8m as negative charter values, mainly in product tankers, unwound with time.
The vessels delivered operating earnings of $27.7m, up from $27m a year earlier.
