Danaos Corp has fallen short of Wall Street consensus as the once-booming container ship sector returned to historical earnings levels in the latter half of 2022 while the pandemic slowly faded away.
The New York-listed owner of 68 boxships reported $153m in net income for the fourth quarter on Tuesday, down from a $166m net profit during the same period last year.
Adjusted net income, which excludes $37.2m in ship sales that was offset by $16.8m in debt extinguishment costs and other expenses, came in at $142m for the three-month period. That is up from $126m a year earlier.
As a result, John Coustas-led Danaos posted $6.99 in adjusted earnings per share (EPS) for the quarter, missing analyst EPS consensus of $7.24 but beating $6.10 in EPS reported a year earlier.
Fourth-quarter revenue totalled $253m, up from $215m a year ago. But profits were lower for the last quarter of 2022 primarily because the company recorded a one-time $70.2m gain on investments during the fourth quarter of 2021.
The company provided a quarterly shareholder dividend of $0.75 despite the lower profit, but chief executive John Coustas gave a bearish post-pandemic outlook for his company and the boxship sector.
“This past year marked the peak of the container market, and the exceptionally strong market conditions we saw over the last two years are behind us,” he said in a statement.
“The decline in box rates to prepandemic levels across all sailing routes foreshadows difficult times ahead.”
He said liner companies are projecting 2023 earnings to be much lower than 2022 earnings as the sector awaits the full effect of a looming recession.
“Charter rates have fallen significantly but remain higher than prepandemic levels,” he said.
“However, charter durations rarely exceed 12 months.”
But Danaos is insulated from this year’s market conditions as 93% of its available days are already contracted for the year, he said.
“We are closely following the developments in the liner space, and the dismantling of the 2M alliance will definitely be positive for the non-operating owners as there will be less efficiency in the networks,” Coustas said.
Danaos posted $559m in profit for full-year 2022, down from $1.05bn in profit achieved for 2021.
Revenue totalled $993m for 2022, up from $690m for 2021. But Danaos still posted a lower profit in 2022 than in 2021 primarily because the owner realized a one-time $578m gain on investments in 2021.