Weak product tanker rates in the third quarter mean margins for Norden’s operated fleet remain negative, causing it to trim its annual profit guidance again.
CEO Jan Rindbo said the Danish owner-operator has agreed to sell five more vessels to capture high values and release cash.
“To capitalise on strong asset values, we have committed to selling five vessels with sales profits expected in the coming quarters,” he said in the third-quarter report.
Deals worth $25m in gains are in the pipeline, of which $21m is expected to be realised in 2024.
Two of the five vessels earmarked for sale have been from declared purchase options in line with the net asset value, the company added.
Norden has lowered the top end of its annual profit guidance from the previous estimate of $240m.
“Due to a weaker tanker market, we narrow the full-year guidance to the range of $160m to 210m,” Rindbo said.
The guidance for 2024 includes $83m in gains from vessel sales already signed and agreed.
Net profit for the third quarter was $25.1m, down from $98.6m in the same period last year.
Revenue grew year on year by 18% to $1.06bn for the quarter.
The assets & logistics division contributed $43m to the bottom line on the back of high charter coverage for its owned fleet.
But its asset-light freight services & trading division booked an $18m loss, which Norden said was due to weaker tanker rates, while earnings from dry cargo are improving.
The company suffered its third consecutive quarter of negative margins on its operated ships, losing $427 per vessel day on its 464-ship operated fleet during the quarter, comprising 371 bulkers and 93 product tankers.
This is $7 per day less than the second quarter, when it had a slightly bigger operated fleet.
Norden said its margins were affected by “persistent high voyage costs and charter hire”.
“In line with expectations, margins in dry cargo have however gradually improved compared to the first and second quarter of the year,” it added.
Norden has “significantly reduced” its dry cargo position for the final quarter of this year and 2025.
“For the remainder of 2024, assets & logistics are expected to continue to generate stable earnings from high coverage,” it said.
“In freight services & trading, the margins in the dry cargo activities are expected to continue to improve, whereas margins in the tanker activities are likely to decline as a result of weaker tanker rates.”
Its long-term average margin has been $1,147 per vessel per day over the past five years.
Norden will pay an interim dividend of DKK 2 ($0.29) per share for the quarter.
It has also started a new $12m share buyback programme that will run until the end of January.
In July, Norden acquired Norwegian dry cargo operator Norlat Shipping to expand its projects & parcelling business.
Norlat specialises in carrying sawn timber from Baltic and continental ports to North Africa and North America.
