Golden Ocean has scrapped its first quarter dividend as its loss grew in dire bulker markets.
The John Fredriksen-controlled company said it wanted to preserve cash during the coronavirus pandemic and will revisit the payout when more clarity is possible and the sector recovers.
The Nasdaq and Oslo-listed shipowner said the net loss to 31 March was $161m, but this included non-cash items totalling $126m, as depreciation rose and it took an impairment hit of $94.2m on leased ships.
The result compared to a loss of $7.4m in the same period of 2019.
Revenue from its 78 vessels rose to $137m from $126m.
The impairment was caused by the weak market conditions and a drop in underlying asset values. It consisted of $70m from seven vessels on financial leases from Fredriksen shipowning company SFL Corp, and $24.2m related to four other bulkers on operating leases.
Golden Ocean had cash of $128.4m at the quarter end, down $34.8m a year ago.
The bulker owner has now completed all 23 planned scrubber installations, so has little capital expenditure ahead.
Long-term debt stood at $1.11bn, with $316m of outstanding financing for 14 capesizes expiring in March next year.
The company expects to be able to refinance this facility prior to maturity, it said.
Fearnley Securities said the result was in line with consensus expectations. It views liquidity as "solid".
Recovery coming?
New chief executive Ulrik Andersen, who took over in April, said the results came in an "extremely weak demand environment" brought on by the Covid-19 pandemic.
"While freight rates have yet to display a meaningful recovery, we are optimistic that conditions will improve over the medium term as the pace of industrial activity recovers."
In the meantime, it is focused on maintaining its "highly competitive" cost structure and preserving its strong financial profile, he added.
The company redelivered a panamax in April after its charter expired, while chartering out three more panamaxes until the end of the first quarter of 2021 at an average gross rate of $12,350 per day.
By comparison, Diana Shipping fixed a panamax to Glencore on Tuesday until the end of June next year at $8,750 per day.
Golden Ocean has two capesizes booked at a fixed rate of $22,750 per day for 2020 and six other panamaxes on time charters that expire between the third quarter of 2020 and the end of 2021, at an average gross rate of $18,090 per day.
The owner achieved an average time charter equivalent rate of $11,076 per day for the fleet in the first quarter, down from $21,668 in the fourth quarter of 2019.
"The company’s operations have been impacted by the Covid-19 pandemic, and the impacts are primarily related to challenges to perform crew changes, lockdowns and delays in ports and at shipyards," Golden Ocean said.
