Golden Ocean Group has bounced back from the loss it booked in early 2023 and has booked a profitable second quarter, despite earnings for capesize and panamax bulk carriers being substantially weaker than last year.
The Oslo-listed company, which counts John Fredriksen as its largest shareholder, reported a net profit before tax of $34.9m for the period, equivalent to 17 cents in earnings per share.
This is a turnaround from the $8.8m loss booked for the first quarter, but down from the $163.7m profit recorded a year ago when freight markets were much stronger.
Total operating revenue shrank to $213.4m from $316.7m year on year.
This equates to an average time-charter equivalent (TCE) rate of $17,664 per day for Golden Ocean’s operated fleet of 97 vessels, down from $29,431 per day in the same quarter last year.
Golden Ocean has declared a dividend of 10 cents per share for the second quarter, the same as for the previous three months.
Interim chief executive Lars-Christian Svensen, who stepped in following the departure of Ulrik Andersen in June, said Golden Ocean had delivered “solid performance against a very volatile macroeconomic backdrop”.
“Despite headline risks related to inflation and interest rates, dry bulk demand remains fundamentally strong, driven by shifting trade routes, the need to secure the energy supply chain, and the increased significance of emerging trades, including the West African bauxite trade,” Svensen said in the firm’s second-quarter report.
Favourable fleet supply growth
“The forecast for fleet supply growth also remains favourable with the orderbook near historical lows. Combined, these factors support our optimistic near and long-term outlook, while closely monitoring the developments in the Chinese economy.”
Golden Ocean’s capesize vessels earned an average TCE rate of $19,083 per day during the second quarter, compared to $30,661 daily in the same period of 2022.
Its panamaxes earned an average TCE rate of $15,617 per day, down from $27,581 a year ago.
During the third quarter so far, Golden Ocean has covered 79% of its capesize days at an average TCE rate of $18,300 per day. Some 98% of its available panamax days have been covered at $13,510 per day on average during the final quarter.
The shipowner has a low level of forward coverage for the fourth quarter, the time of year when capesize and panamax markets are seasonally at their strongest.
Around 34% of Golden Ocean’s capesize operating days in the fourth quarter have been fixed at a daily TCE rate of approximately $21,500. It has covered around 26% of its panamax days for the final quarter at an average TCE rate of $16,500 per day.
‘Highly attractive terms’
Golden Ocean took delivery of four kamsarmax newbuildings in the second quarter and another two kamsarmax newbuildings have joined the fleet since the quarter ended.
The company has secured a new $40m loan facility agreement with unnamed lenders to partially finance the latter two kamsarmaxes at what it described as “highly attractive terms”. The facility has a seven-year tenor and an interest rate of SOFR plus a margin of 175 basis points per annum.
This follows an $80m credit facility signed in April that has partly financed the four kamsarmaxes delivered last quarter.
Analyst reaction
DNB Bank said sees potential for “significant negative revisions” to its near-term estimates on the back of what it called “soft” forward fixtures for the current quarter to date.
The bank had estimated $30,200 per day in capesize earnings for the fourth quarter, but Golden Ocean reported just under $10,000 per day less than this level in its forward coverage for the period.
DNB estimates that Golden Ocean’s third-quarter Ebidta will be around $70m, compared to adjusted Ebitda of $80.4m during the second quarter.
Fearnleys Securities reacted positively to the Golden Ocean results on Tuesday/
“Overall, despite a weak market, we find the report strong on the relative through above-market bookings and lower than expected costs,” analysts from the Norwegian investment bank said in a note on Tuesday.
Golden Ocean’s third-quarter earnings should remain “flattish” in comparison with the previous three months, Fearnleys said.
Consensus estimates will come down “significantly” from current earnings-per-share (EPS) estimate of 22 cents for the third quarter, it added.
