Norway's Spar Shipping has reported a doubling of its annual operating profit for 2018, but the privately-owned bulker owner said the results so far this year have been disappointing.
The Bergen-based company’s operating profit rose last year to NOK 235m ($27m at today's rate) from NOK 107m in 2017.
However, the substantial impact of currency fluctuations meant that Spar's pre-tax profit was lower than in 2017.
“The loss of considerable iron-ore capacity out of Brazil has put a clammy hand over the markets in the beginning of 2019,” the board stated in its annual report.
The loss of considerable iron-ore capacity out of Brazil has put a clammy hand over the markets in the beginning of 2019
Spar Shipping board
Spar has a fleet of 18 supramaxes and six ultramaxes with an average age of nine years. The company is now pursuing a spot-oriented charter policy due to prevailing weak markets and its vessels are either on spot or shorter charters or longer charters with index-linked rates.
Change in tactics
Traditionally, Spar has fixed out its ships on a long-term basis, but current margins have made this an unattractive solution.
“We consider the markets to be uncertain also going forward,” company CEO Jarle Ellefsen told TradeWinds.
Spar continues to pursue a claim against Grand China Logistics Holding of China over terminated charters for three supramaxes. The Chinese company has lost in UK court, but the dispute has now shifted to a Chinese court. The claim now amounts to more than $40m, including interest and other costs.
Ellefsen said Spar does not know when a final decision will be made in the case.
The Norwegian company posted book equity of NOK 1.45bn at the end of 2018, up from NOK 1.35bn in 2017.
Asset's book value
Spar’s 24 ships have a total book value of NOK 2.264bn ($259m). Seasure Shipbroking's VesselsValue estimates these ships are worth $281m. The long-term debt on the fleet is NOK 1.5bn.
Spar is owned by the family of the late Helge Eide Knudsen, who died in July 2015 at the age of 82. He set up his retail business in 1962 and Spar in 1990.
Knudsen is survived by his wife, Reidun, and sons Tom and Iwan Eide Knudsen who both sit on the Spar board.
