US-listed Danaos Corp said on Tuesday that it will use the ongoing containership bonanza for further fleet growth – but not before the secondhand market calms from its current frenzy and the regulatory horizon clears up.
The Athens-based company declared late on Monday its first dividend payment since 2008 after announcing a whopping $297m profit for the first three months of the year.
The optimistic outlook for containerships whetted the appetite of analysts, who quizzed company management in a conference call whether any increase was on the cards from the announced $0.50-per-share payout.
Danaos executives, however, replied that they preferred rewarding investors through growth instead. The primary motive to reinstate the dividend was to enlarge the shareholder base by making the company eligible for new potential investors, they explained.
“In the pallet of our capital allocation decisions, growth is at the forefront,” Danaos chief financial officer Evangelos Chatzis said.
Danaos profits will likely stay on the balance sheet in the near future. Secondhand acquisitions in current market conditions would be ill-advised, the company's chief executive officer John Coustas said on the call.
“The market is overheated. … There’s no point in spending money today on very expensive vessels,” he said, adding: “Now it’s the time just to reap rewards.”
With boxship freight rates hitting their highest levels in more than ten years, Danaos is in “best ever position" and currently negotiating charters with a duration of more than four years for some of its 4,000-teu ships, Coustas said.
Vessels smaller than that are being currently negotiated for charters lasting between two and three-years added Coustas, whose company manages 65 containerships.
With total contracted revenues of $1.2bn, which are set to increase further, management said it made more sense to save cash for future investment when environmental regulations become clearer.
“There’s no clarity and when there is no clarity the best strategy is to build a war chest and be ready to face whatever situation arises,” Coustas said in the conference call.
Uncertainty concerns the effect the IMO’s new ship efficiency standards will have on the market, as well as the terms under which the European Union will include shipping in its carbon emissions trading system (ETS).
“We have no clue… how this [ETS] is going to affect old versus new vessels,” Coustas said.
