Western Bulk Chartering has had a profitable first half on the back of improved margins on its operated vessels and intends to reinvest in growing its business.
The Oslo-listed bulker operator will not pay an interim dividend and said it will use its cash as working capital for volume growth.
The company reported a net profit before tax of nearly $3m, up from a loss of $4.39m in the first half of last year.
The interim result includes a $3.4m gain on positional freight derivatives, while the first half of 2023 included a $2.7m loss.
It made a net time charter margin of $626 per ship day in the first six months, up from $310 per ship day a year earlier.
Gross revenue grew 13% year on year to $647.4m from $574.2m.
Western Bulk’s operated fleet averaged 133 bulk carriers during the first half, up from 125 last year, driven by growth within the panamax segment.
The operated panamax fleet grew from six vessels at the beginning of the year to 16 by the end of June.
Entering the year, the company held a long position with more vessels than cargo commitments, and thus benefited from the strong market, Western Bulk said in its financial report.
“To a large degree, the profit from this long position has been reinvested in the repositioning of vessels [backhaul] from the Pacific to a typically higher-paying Atlantic market, and this is expected to yield substantial returns in the second half.”
The spread between Atlantic and Pacific markets averaged $924 per day during the first six months, down from $2,151 per day.
Higher-paying steel exports out of China meant Western Bulk had lower costs in repositioning vessels compared with historical levels.
The operator is bullish about the Atlantic market.
“As is typical with seasonal trends, we anticipate the Atlantic market to outperform the Pacific market in [the second half of 2024],” it said.
“The upcoming US grain export season, along with sustained healthy volumes from the South Atlantic, would be key factors driving such outperformance.”
Western Bulk had $12.7m in free cash and no outstanding interest-bearing debt as of 30 June.
It spent $20.2m of its free cash in the first half, mostly used as working capital as its volumes increased. It also covered the cost of repositioning vessels from the Pacific to the Atlantic.
In mid-July, Western Bulk bought and sold an ultramax bulk carrier in a deal that will generate $4.5m in gross profit that will be recognised in its third-quarter results.
The company exercised its purchase option on the 63,500-dwt Western Oslo (built 2019) and bought the ship from Nisshin Shipping on undisclosed terms.
Databases show that the buyer is HMM of South Korea. The ship has been renamed Pacific Champ.
At the time, Western Bulk said it would continue to evaluate other purchase options in its trading book.
New era
Interim chief executive Orjan Svanevik will be succeeded on 1 September by Torbjorn Gjervik, who is stepping up from his current position as head of the North Atlantic region.
Former CEO Hans Aasnaes announced on 15 February that he would step down after five years in the top job, the day the company filed loss-making results for 2023.
Speaking to TradeWinds in June, Gjervik said Western Bulk will continue its traditional focus on the supramax segment and will keep building its presence with panamaxes, which has been “profitable” so far.
Joachim Frantsen will succeed Gjervik as head of the North Atlantic desk on 1 September and Amit Jakhmola becomes head of the Indian Ocean desk.
