Danaos Corp’s adjusted profit dipped slightly farther than analysts expected in the third quarter as the company’s charter earnings showed a slight decline in a container ship market that saw retailers continue to destock their inventories in the face of sluggish sales.
The New York-listed owner of 68 container ships and four capesize bulkers recorded $133m in net income for the three-month period, almost double the $66.8m in net income recorded a year earlier, when the company recorded an $84m loss in its investment in liner operator Zim.
Adjusted for factors typically excluded by analysts, third-quarter net income came in at $143m, down from $177m in adjusted net income during the same period last year.
Danaos posted adjusted earnings per share of $7.26 for the quarter, which missed consensus by $0.10, according to Seeking Alpha data.
Revenue for the third quarter totalled $239m, down from $260m a year earlier.
“The macroeconomic environment continued to deteriorate during the third quarter of 2023, and container transport stagnated in most areas due to continued inventory destocking and weak retail sales,” chief executive John Coustas said in a statement.
“As a result, the profitability of liner companies has dramatically decreased, and the major operators have announced sweeping cost-cutting measures.”
Danaos’ container ships earned an average daily charter rate of about $39,100 during the third quarter, down from an average daily charter rate of $41,000 earned during the third quarter of 2022.
Regarding the capesize bulker sector, which Danaos has entered earlier this year with the acquisition of seven ships, Coustas said he does not expect any “sustained upward momentum in the near term“, but will keep watching the sector “closely“ for any further expansion opportunities.
Danaos confirmed in the earnings release that the two latest capesizes it bought are Sinokor’s 175,900-dwt sister ships West Trader and East Trader (both built 2009), which will join its fleet by the end of the year.
Danaos increased its quarterly dividend to $0.80 per share and authorised an additional $100m in share buybacks to replenish the initial $100m authorisation despite its pessimistic outlook, in great part due to having a boxship charter backlog of $2.5bn in contracted revenue.
“Due to the prudent execution of our strategy, we have been able to return over $200m to our shareholders over the last 18 months and simultaneously grow our fleet in the container segment by placing 10 newbuilding orders and creating exposure to the dry bulk segment through investments in companies and vessels,” Coustas said.
“We will strive to continue to create value for all our shareholders while ensuring the long-term prosperity of Danaos.”
Danaos reported $426m in net income for the first nine months of 2023, up from the $407m posted during the same time frame in 2022.
The company collected $724m in revenue from January to the end of September of this year, down from $741m taken in during the same period in 2022.