Norway’s Grieg Group’s bottom line tumbled last year as open-hatch bulker rates came off 2022 highs.
The Bergen-based shipping outfit reported an after-tax profit of $30m for 2023, a dip from the year prior when that figure hit $151m as the company benefited from skyrocketing rates due to pent-up demand from Covid-19 and logistical inefficiencies.
“We expected a lower result than the all-time high of 2022,” chief executive Matt Duke said in the privately-held company’s annual report.
“As our business is weighted on long-term contracts, the fluctuations are less dramatic, and there is a delay relating to the ups and downs on the market.”
The “normalised” rates as described by the company caused revenue to fall from $319m in 2022 to $179m last year.
Total costs fell to $146m from $149m, even as vessel operating expenses rose to $79.7m from $74.5m due to vessel repairs and upgrades, some after the ships came off bareboat charters.
This year, Grieg sees the demand side of the market as muted as Chinese gross domestic product growth is expected to fall to 4.2% from 5% in 2023, helping to keep forecasted dry bulk demand growth to just 2%.
Grieg said that makes the supply side key for the company.
“The orderbook in the dry bulk sector remains close to all-time lows which, combined with limited shipyard capacity through 2026, effectively limits fleet growth for the coming years,” the company said.
Grieg said some risk came from the global container ship fleet, which is set to increase 10% this year and 6% next year, although much of that downside is mitigated as its cargoes are fixed on forward contracts.
It also expects scrapping to increase in 2024 after 446 ships and rigs were sent to the breakers last year, which will benefit the market and its sustainability services arm, Grieg Green, which provides ship recycling research and supervision.
“The group is considered to have a strong position for the coming year with fewer effects of a downside scenario,” the company said.
