Ardmore Shipping is planning to change its dividend policy, as it de-emphasises returning capital to shareholders.
The move comes after chief executive Anthony Gurnee complained the tanker owner's shares were trading at a significant discount.
Amendments coming
The Cork, Ireland, tanker owner said Monday that its policy of paying out 60% of earnings from continuing operations in dividends will be amended as it raises fleet maintenance to its top capital allocation priority.
"Our overriding objective is building long-term shareholder value through operating performance, capital allocation and effective risk management in what is a highly cyclical industry," Gurnee said in a statement.
"Furthermore, we believe the shipping industry is on the cusp of fundamental change driven by [greenhouse gas] emission reduction targets and resultant new vessel technologies, and we plan to ensure that Ardmore is well-positioned to capitalise on opportunities as they arise."
The company's new focus will be on investing in "improved operating performance, regulatory compliance and fleet renewal as required".
Paying dividends and buying back shares was pushed down to fourth, behind reducing leverage to 40% debt to total capital, as well as growing accretively.
For the fourth quarter of 2019, Ardmore posted a $2.5m adjusted profit. The return to profitability triggered a $0.05 per share dividend, its first since 2016.
On its earnings call, Gurnee said he was not happy with cutting a dividend when shares were trading below its net asset value (NAV).
In August 2019, the company disclosed its self-calculated NAV was $9.74 per share or $10.15 per share when the company's shipmanagement business is taken into consideration.
After the earnings release, Ardmore's shares shot up to $6.17 from $5.54.
Before the open Monday, shares had risen $0.03, or 0.61%, to $4.98.
Its 52-week high is $9.79 and year-to-date high is $8.79.
