Shipping investment fund Tufton Oceanic Assets is expecting further challenges over the rest of 2020 after revealing a loss in the 12 months to 30 June.
But it said recent upturns in bulker and boxship markets should benefit the bottom line.
The London company added it had "performed reasonably well on a net asset value (NAV) basis, benefiting from the diversification of its fleet". But its its share price, like that of many others, has suffered as a result of the impact of the Covid-19 pandemic.
Tufton produced a strong portfolio operating profit of $29m, but this was outweighed by a $30m non-cash fair value loss as asset values fell in line with demand.
About three-quarters of this decline came in 2020, as containership and bulker values dropped.
Tufton said it benefited from sector diversification as the negative impact of the demand shock from Covid-19 lockdowns on containership and bulker markets was partly offset by the strong performance in tankers.
The company owns 16 ships, including product tankers, boxships and three handysize bulkers. The average charter length is two and a half years.
Red ink
The net loss in the year to 30 June was $1.22m, compared to a profit of $16.42m in the previous 12 months.
Revenue rose to $63m from $30m as it added five vessels in the period.
Chairman Rob King said the company had endured "one of the most challenging periods for the shipping sector and global economies in general".
"The performance of the fleet has been strong with the tanker sector significantly outperforming bulkers and containerships. Although we see continued divergence between sectors, the diversity of our fleet has allowed the company to provide some insulation against the under-performing sectors," he added.
King warned that it is likely the remaining part of 2020 will not be any easier and the uncertain future in global markets will lead to new challenges.
Charter renewals fell
"We saw a reduction in charter period renewal and charter rates fall in the first half of 2020 primarily due to the impact of Covid-19," the chairman said.
But towards the end of the financial year, the company noted a significant improvement in the shipping market as global lockdowns to contain Covid-19 were relaxed.
"We are optimistic for the company’s prospects as the global shipping markets return to growth," King said.
The fleet had only 26 days of unplanned commercial idle time over the year, and none between 1 July and 22 September.
"Much of the market volatility resulting from Covid-19 was mitigated by strong operating performance and we believe the company stands to benefit from a recovery as asset values rebound with demand, albeit with a lag," Tufton said.
The company is very confident about maintaining its dividend of $0.07 per share, which is an 8.5% yield on the share price and 7.5% on NAV.
