Petros Pappas-led Star Bulk Carriers reported a hefty profit increase on the back of an unusually strong first quarter in the the last financial earnings before taking over Eagle Bulk Shipping.
Net income between January and March climbed at an annual pace of 63% to $74.9m, which is the company’s highest reading in five quarters.
“Star Bulk successfully leveraged a counter-seasonally strong dry bulk market,” chief executive Pappas said in an earnings release late on Wednesday.
The strength of the market is reflected in Star Bulk notching up average daily time charter equivalent earnings of $19,627 in the period — the highest level since the third quarter of 2022.
As a result, the company’s revenue climbed by 16% year on year to $259.4m.
Profit got an additional $8.8m boost from gains related to ship sales carried out to renew the Star Bulk fleet.
“We have taken advantage of elevated asset values to continue selling primarily older and less fuel-efficient vessels, including seven vessels which we are delivering during the second quarter,” Pappas said.
The company has booked $38m in capital gains from ship sales over the past three quarters.
Star Bulk confirmed on Wednesday that it agreed to sell three of its older vessels in the period: the 115,300-dwt Star Paola (built 2011), the 175,100-dwt Star Audrey (built 2011) and the 56,600-dwt Star Pyxis (built 2013) for an undisclosed price.
TradeWinds has already reported all these transactions.
The new deals bring to 20 the number of ship sales Star Bulk has carried out over the past 15 months for total estimated gross proceeds of about $375m.
The number of sales rises to 23 vessels when adding three divestments carried out by Eagle Bulk before its merger with Star Bulk got approval from the two companies’ shareholders in April.
The three vessels in question are the 55,900-dwt Crowned Eagle (built 2008), and the 56,000-dwt Crested Eagle and Stellar Eagle (both built 2009).
Eagle Bulk’s takeover by Star Bulk creates a juggernaut owner and operator of 170 bulkers on the water or under construction — almost all fitted with scrubbers.
Star Bulk declared a dividend of $0.75 per share on its first-quarter earnings, up from $0.45 in the fourth quarter of 2023 and $0.22 in the third.
The company’s stock in New York closed at $25.57 per share on Wednesday, which gives the company a market value of $2.9bn.
This makes Star Bulk one of the few companies to trade above the net asset value of its fleet, which stood at $2.44bn at the end of March, before the all-stock takeover of Eagle Bulk’s 52 ships closed.
“We are optimistic about the medium-term prospects of the dry bulk market given the favourable orderbook and upcoming, more stringent environmental regulations,” Pappas said.
