The strong car carrier market has owners revising their dividend policies, but the market is reacting to each differently.
Two of the world’s largest car carrier owners, first-place Wallenius Wilhelmsen and sixth-place Hoegh Autoliners, made moves to up their shareholder payouts as rates rise in a tight market with increasing automotive exports.
Hoegh Autoliners’ dividend hike seems to have attracted investors, while Wallenius Wilhelmsen’s drove them away.
“Arguably, the market was disappointed that shareholder distributions did not rise, which, coupled with lower volumes due to Red Sea diversions, sent the share price down,” Fearnley Securities analyst Oystein Vaagen said on Thursday regarding Wallenius Wilhelmsen following its earnings release.
Its proposed plan — to be voted on at the upcoming annual general meeting — would see the company pay dividends totalling between 30% and 50% of net profit after tax on an annual basis, plus open the door for extraordinary dividends and share buybacks.
Figures from DNB suggest the dividend could total NOK 47 ($4.44) for 2024, but that another NOK 10 could be paid out at the board’s discretion.
Still, investors pared down their Wallenius Wilhelmsen holdings. The share price fell from NOK 116.40 to NOK 108.10 on Wednesday, then further to NOK 105.90 in midday trading on Thursday.
Meanwhile, Hoegh Autoliners shares surged from their NOK 105.80 close on 7 February to NOK 121.60 after their earnings report on 8 February and further to NOK 132.60 on Thursday.
In its fourth-quarter earnings, the company said it intends to pay out 100% of the cash left over after amortisation of debt facilities, capital expenditures and payable taxes.
Fredrik Dybwad, Vaagen’s colleague at Fearnleys, called the dividend earnings the “main event”.
DNB analyst Jorgen Lian said the “updated policy along with strong market fundamentals remains supportive for the investment case”.
The diverging investor sentiment comes as both companies report optimism heading into 2024.
Both have contracts coming open this year, into markets that are undersupplied and demand spiking thanks to increasing Chinese imports.
While the two companies have cautioned that diverting ships around the Cape of Good Hope to avoid potential attacks in the Red Sea could drag on earnings, they have also reported strong contract renewals.
In mid-January, Hoegh Autoliners said it had a contract in excess of $100m to carry electric vehicles from Asia to Europe through the end of 2028.
Since the new year, Wallenius Wilhelmsen announced contracts totalling nearly $1.8bn, including a $1bn deal that started in late 2023.
