Jinhui Shipping and Transportation is set to report a full-year loss of $46m to $47m due to the deteriorating conditions in the dry bulk market.
The supramax specialist said a major contributing factor to the loss is an impairment of around $49m on its fleet of 22 vessels.
The company also blamed the loss on “an unprecedentedly challenging environment” for the poor performance.
The Oslo and Hong Kong-listed company said the forecast was based on a preliminary assessment of the unaudited consolidated management accounts.
“In the first half of 2022, dry bulk shipping market showed strong signs of a rebound amid the global economic recovery,” Jinhui said.
“However, due to subdued macroeconomic conditions in the second half of 2022, the dry bulk shipping market suffered a slump, particularly in the fourth quarter of 2022.
“The demand for dry bulk commodities was weak due to the slowdown of global economic growth as a result of high inflation and rising interest rates, the Covid-19 related issues as well as multiple geopolitical issues that dampened economic activities globally,” the shipowner added.
Jinhui said the group reviewed the dry bulk shipping market environment, the overall macro environment and the market value of dry bulk vessels and its management considered that impairment indication of the group’s fleet existed and performed an impairment review on 31 December 2022.
“Based on the ongoing discussions with the auditor of the company and prudent consideration, it is considered the long-term intrinsic values of certain owned vessels are expected to be significantly less than their respective carrying amounts,” Jinhui said.
“This indicated that substantial impairment loss on owned vessels of around $49m is expected to be recognised at end of 2022. However, such impairment loss amount is yet to be ascertained.”
Jinhui said it is still in the process of preparing and finalising the financial results for the fourth quarter of 2022 and the full year, which are due to be released on 28 February 2023.
The full-year loss of $46m marks a stark reversal of fortunes, compared to the profit of $194m reported by Jinhui for the whole of 2021.
However, the previous year’s results were boosted by the reversal of a previous impairment loss of $134m on its fleet.
In contrast to Jinhui, supramax rival Belships on Wednesday reported a 2022 full-year profit of $175m and a fourth-quarter profit of $34.5m.
