Secured income from long-term chartering agreements has helped Costamare cope with slowing container ship and bulker markets.
With 95% of its container ship fleet covered for the rest of the year and nearly $1bn in liquidity piled up during the coronavirus container ship bonanza, the US-listed owner of 72 boxships and 45 bulkers said on Wednesday that it is on the lookout for new investment opportunities.
The Konstantinos (Costis) Konstantakopoulos-led company reported a record quarterly net income for the fourth quarter of $186.7m, up 22% year on year.
That propelled net income for the full year to a record $523.9m in 2022 — an increase of 30% from 2021.
For the first time in the company’s history, full-year revenue broke through the $1bn mark, growing by 40% to $1.11bn.
Feeling comfortable
A slowdown in the fourth quarter, however, was palpable.
Net voyage revenue dropped by 6.5% year on year in the three months to December, to $265.4m.
The drop was almost entirely due to its bulker fleet, which Costamare is trading in the spot market and in which it concluded 38 chartering agreements over the past three months.
According to a breakdown of voyage revenue figures by fleet segment, its 45 bulkers raked in $59.4m in the fourth quarter, down from $78m in the third and $100.1m in the second.
Container ship revenue suffered a much smaller drop of 2.8% from the third quarter, to $205.6m.
Costamare still managed to post a record quarterly profit in the final three months, mainly due to a $105.1m capital gain it booked from the lucrative sale of three old container ships it concluded when the market was still booming.
Stripping out such one-off items, adjusted net income shrank at an annual pace of 33% in the fourth quarter to $74.8m.
Timely sales of older container ships will continue to support Costamare’s profit in 2023.
The company expects to book a capital gain of about $48.5m in the current quarter from the completion of its already announced sale of the 6,644-teu Maersk Kalamata (built 2003).
“We are in the process of disposing of some older tonnage at prices fixed during a tight market environment,” chief financial officer Gregory Zikos said.
Income stability from container ships is also expected to continue in 2023, during which just a handful of Costamare boxships will see their charters expire.
“We are above 95% covered for 2023 and we have proactively arranged long-term employment on a forward basis for a number of containerships coming off charter between 2023 and 2025,” Zikos said.
Asked by analysts in a conference call later on Wednesday how he expects falling container ship markets to influence earnings, Zikos said Costamare feels “comfortable” with the quality of its charterers.
To shield itself from falling container ship markets, Costamare disclosed in November new chartering deals that secure up to five years of additional employment, on a forward-starting basis, for 11 of its boxships.
Walls of cash
At the same time, ongoing robust profits have kept the company’s cash pile accumulating.
Freely available cash, cash equivalents and liquid short-term investments soared to a record $838m at the end of 2022, more than three times the $276m the company had available 12 months before.
Costamare calculates its overall liquidity at even higher levels to $973m, up from $552m at the end of 2021.
That ample liquidity has helped it manage its debt. The company announced $558m of new refinancing operations for 12 container ships and as many bulkers on Wednesday.
Its cash pile also lends credibility to Costamare statements that it still has an appetite to invest — even after building from scratch a fleet of 45 bulkers in 2021.
“On the back of our increased liquidity and container charter coverage, we are actively pursuing new investment opportunities in the shipping sector that have the potential to provide enhanced returns at acceptable risk levels,” Zikos said.
Costamare announced last month that it was keeping its dividend steady at $0.115 per share.
Providing an update to its stock buyback plan, the company said it has about $90m in funds available to repurchase common shares and $150m left for preferred ones.
