Danaos, an owner of more than 70 container ships, sees no quick end to the bonanza in its market, despite apprehension rising in the sector.
After yet another quarter of exceptionally good results, the US-listed outfit reported net income of $331.5m for the first three months, up 12% year on year.
Stripping out dividends and accounting gains from its stake in Israeli liner company Zim, Danaos’ adjusted net income quadrupled in the period to a record $235.3m.
Danaos revealed in its earnings statement that it sold 1.5m Zim shares in April for $85.3m. According to TradeWinds calculations, the sale reduced Danaos’ Zim holding to 5,686,950 ordinary shares, or 4.7%.
“We are operating from a position of strength and confidence,” chief executive John Coustas said in a press release issued late on Monday.
Box freight and charter rates “have not been significantly affected” by soaring inflation and war in Europe.
With China hardly budging from lockdowns in key cities to battle Covid, supply chain inefficiencies “continue unabated and there is little likelihood that conditions improve this year”, Coustas said.
He acknowledged, however, that sentiment in the market has changed as “market participants have adopted a more conservative short-term attitude”.
Danaos still feels comfortable, with its vessels almost fully booked for the next 12 months at a charter coverage ratio of nearly 96%.
The company is sitting on a charter backlog worth $2.7bn running through to 2028.
Three birds with one stone
This, and a sizeable liquidity buffer of $708m at the end of March, allow Danaos to kill several birds with one stone, Coustas said — from exploring fleet expansion to cutting debt and rewarding shareholders.
Danaos maintained its dividend at $0.75 per share — the level the payout was elevated to a few months ago when the company reported $1.05bn in net income for 2021.
As the US Fed and other central banks raise interest rates, the company is using part of its cash to pay down debt and lower its finance costs.
It said it will repay $437m of loans and lease obligations ahead of maturity by the end of the second quarter.
Danaos has 71 container ships on the water. It also has four 8,000-teu boxships under construction at Daehan Shipbuilding and two 7,100-teu newbuildings at Dalian Shipbuilding Industries Co.
They are all scheduled for delivery between March and September 2024 and will be ready to run on green methanol “when such fuel is widely available”, Coustas said.