John Fredriksen's Golden Ocean Group (GOGL) is expecting favourable market fundamentals to last for years yet, as profit continues to roll in.
The world's largest listed owner of capesize vessels said net earnings in the third quarter were $195.3m, up from $39m in the same period a year ago and from $104.5m in the second quarter.
Oslo and Nasdaq-listed Golden Ocean posted revenue of $387.6m, against $185.5m in 2020.
Chief executive Ulrik Andersen said the company had maintained significant exposure to the strong freight rate environment throughout the year, resulting in significant cash flow generation.
"We have already contracted more than 30% of our open days for the first quarter of 2022, mitigating risk and ensuring cash generation into next year," the CEO added.
'Powerful dynamic'
"The combination of expected global demand growth, modest fleet growth and inefficiencies we believe will persist in the coming years creates a powerful dynamic for Golden Ocean," Andersen said.
Time charter equivalent (TCE) earnings for capesizes were $38,142 per day in the quarter, while panamaxes and ultramaxes achieved $24,733.
The whole fleet averaged $32,262 per day.
In the fourth quarter, Golden Ocean's capesizes have 83% of days booked at a stronger $41,900 per day.
Panamaxes are fixed at $27,300 for 87% of the available days.
For the first three months of 2022, capesizes have cover at $33,200 per day for 30% of available days, and panamaxes have 36% of days booked at $24,150.
The company has handed over $321m in dividends so far in 2021, including a pay-out of $0.85 per share in the third quarter.
Fearnley Securities called the results "very impressive", adding that Golden Ocean had put the investment bank's estimates "to shame."
Ebitda of $218m beat consensus in the mid-$180m range.
Fearnleys is lifting rate assumptions for capesizes by between $3,000 and $4,000 per day in the fourth quarter.
"Overall, a very impressive quarter from GOGL, delivering on virtually all metrics and we would expect a positive share price reaction," the investment bank said.
Global growth forecasts remain strong, and albeit volatile, rates have remained at very profitable levels, the shipowner said.
"Although challenges remain as various countries suffer through incremental waves of Covid-19 cases, the combination of healthy underlying demand growth and modest fleet growth is supportive of a positive market outlook for the coming years," the company added.
Chinese concerns
Golden Ocean is however monitoring developments related to the Chinese real estate industry, which accounts for 30% of domestic steel demand, as well as the potential for stimulus-driven infrastructure projects to offset any decline in demand.
The group also believes the Chinese government will seek to reduce industrial production activity as the 2022 Winter Olympics approach, to reduce air pollution during the games.
"The company's constructive market outlook is based on both the continuing recovery in global demand for dry bulk commodities, and equally importantly, powerful supply-side dynamics that have not been present for many years," Golden Ocean said.
The company recorded a gain of $11.3m from its investment in bulker owner SwissMarine, but its holding in wind farm vessel owner Eneti, the former Scorpio Bulkers, brought in a $0.4m loss.
