Norden is sharing the wealth with its shareholders after a “fantastic” second quarter with a surprise interim dividend and a new share buyback programme.
Record margins generated by Norden’s freight business had a big pay-off for the Danish owner-operator in the second quarter.
In fact, the Copenhagen-listed firm, which has a fleet of product tankers and bulkers, has already made more net profit during the first half of 2022 than it did during 2021 as a whole.
Chief executive Jan Rindbo said it was a “fantastic second-quarter result based on a significant shift in market exposure from dry cargo to product tankers”.
“This has enabled Norden to capitalise on the exceptional product tanker rates, while also generating value in a weakening dry cargo market from an extensive cargo and cover portfolio,” he said in the firm’s financial report.
“This highlights our trading ability and proactive risk management, which enables us to create value in both rising and falling markets”.
Norden’s bottom line hit $178.7m for the second quarter, compared to $31.8m during the same period last year.
Norden has declared an interim dividend of DKK 30 per share, which it said was based on the “strong cash flows and favourable earnings outlook”.
It has also started a new $40m share buyback programme that will run from 18 August until 1 November.
“This is a positive, in our view, as it provides cash return to shareholders beyond the normal annual dividend,” analyst Anders Redigh Karlsen, head of shipping at Kepler Cheuvreux, said of the new buyback.
Overall, Norden’s profit for the first half of this year stands at $296m, up from $17m in the first six months of 2021.
This means the firm has already topped what it made during the full year 2021, when it booked $204.5m in profit.
Much of the quarterly result was generated by Norden’s freight services & trading division, which oversees its operated fleet.
Norden said the division's record margins followed its high level of exposure to surging medium-range (MR) tanker rates and a short position in dry cargo, which enabled it to benefit from falling rates.
This generated $153m in profit for the freight division during the three-month period, up from $30m during the second quarter last year.
Rising product-tanker values also helped Norden's assets & logistics arm to massively increase its profit year on year from $2m to $26m.
Norden has fully covered its dry cargo position until the end of 2023 at what it called “profitable” rates.
The company has this year made a big shift in its market exposure from dry cargo to product tankers across both business units.
Looking ahead, Norden said it expects profit for 2022 in the range of $560m to $640m, the same as the guidance it issued at the beginning of August.
“We expect the share to trade up on today’s result and the hinting around a potential solid start of 2023,” Karlsen said in a note on Thursday.
The Copenhagen-listed stock was up by just over 13% from the open and was trading at DKK 403.40 as of 09:45am in the Danish capital.
