Bulkier owner Golden Ocean Group has confirmed the sale of another panamax and is paying out its biggest quarterly dividend to shareholders since 2022.
The shipowner, listed in Oslo and on the Nasdaq in New York, has just filed another round of profitable figures for the final quarter of last year.
It reported adjusted net income before tax of $64.6m for the fourth quarter, equivalent of 32 cents in earnings per share. Net income on a non-adjusted basis was $57.5m, down from $68.2m a year before.
Golden Ocean will pay out 30 cents per share in dividends for the period, having paid out just 10 cents for each of the preceding three quarters. This is the shipowner’s biggest quarterly payout since late 2022.
The company, which counts John Fredriksen as its biggest shareholder, confirmed the sale of the panamax bulker during the final quarter for a net price of $15.8m, which will generate a book gain of $1.4m. The specific vessel was not named.
Lars-Christian Svensen, who was made permanent chief executive in January, said the company’s fleet had a high level of exposure to the spot market during the last three months of last year, which generated “strong performance” that has continued into 2024.
“The market for large-size dry bulk vessels continues to outperform the broader freight market due to increasing tonne-mile demand for various key commodities, including iron ore, coal and bauxite,” he said in the quarterly report.
“We have entered 2024 with strong demand in Asia and a broad-based global economic recovery underway, creating an overall healthy demand picture.
“Fleet growth, particularly in the capesize segment, remains at historically low levels, and the global fleet is trading at historically high efficiency levels.”
Golden Ocean has raised $625m of debt that will fully fund its remaining capital expenditure obligations and refinance all of its debt maturities until 2026. The debt was priced at an average margin of 172 basis points.
Svensen said the financing means the company is “well positioned” to continue paying out dividends to shareholders.
“Golden Ocean has now paid a dividend for 11 consecutive quarters, demonstrating the company’s potential as well as the resilience of its performance in weaker market conditions,” he said.
The annual result did not quite compare with 2022, when freight markets were much stronger.
Golden Ocean finished 2023 with net income of $112.3m, down from $461.8m in 2022.
Total operating revenue shrank to $885.8m last year, down from $1.1bn the previous year.
The annual result was also hit with impairment charges on vessels. The company recognised a loss of $11.8m on the sale of two capesizes for $43.6m in March.
Golden Ocean’s capesizes earned an average time-charter equivalent (TCE) rate of $25,176 per day during the fourth quarter, compared to $21,399 per day in the same period of 2022.
Its panamaxes earned an average daily rate of $16,738 during the period, down from $18,992 during the final quarter of 2022.
Golden Ocean’s live fleet comprises 52 capesizes and 31 panamax vessels, plus a further eight capesizes chartered in on long-term leases with profit-sharing arrangements. The owner also has three 85,000-dwt kamsarmaxes on order.
About 74% of Golden Ocean’s capesize operating days in this quarter have been fixed at a daily TCE rate of about $25,000. For the second quarter, forward coverage will be lower at 25% of days but at the same average daily rate.
Some 84% of its panamax days have been covered at $15,400 per day for the first three months of 2024. Just 19% of days have been covered next quarter at an average daily rate of $14,200.
Analyst reaction
Golden Ocean comfortably beat expectations for the fourth quarter (see box) and analysts were impressed by the strong level of forward bookings, which could lead to revised 2024 estimates.
“In sum, the report saw a firm beat to Q4 expectations and supportive Q1/Q2 fixtures with upside on current forward curve but given recent share price performance we believe much is priced into the shares,” the shipping equities team at Norway’s DNB Bank said in a note on Wednesday.
“Hence, [around] 2-4% positive share price reaction warranted.”
The bank said Golden Ocean’s “strong” reported forward coverage could lead to a estimates for the company’s 2024 Ebitda being revised upwards by about 6%. The consensus estimate is currently $459m for this year.
Fearnleys Securities agreed that analysts are currently setting their expectations too low for Golden Ocean in the short term.
“We expect the equity to outperform peers today and continue to believe street 2024 expectations remain too low,” the team said on Wednesday.
Fearnleys’ estimate for Golden Ocean’s 2024 Ebitda is some 15% above the consensus.
