Canada’s Algoma Central Corp has reported a 30% decline in full-year net profit as higher costs outweighed gains in revenue.
The shipowner booked a net profit of CAD 82.8m ($61.3m) for 2023 against the CAD 119.9m achieved in the previous year.
Full-year revenue increased by just over 6% year on year to CAD 721m. However, costs increased by 10% to CAD 539m.
The Ontario-based shipowner said the prior year’s results included a CAD 9.9m gain from the sale of property and a CAD 10.8m impairment reversal.
Algoma’s domestic dry bulk segment revenue increased 13% to CAD 408.1m, reflecting higher base freight rates and 7% higher volumes, which drove a 14% increase in revenue days.
Operating earnings decreased 9% to CAD 59.4m compared with the previous year, entirely due to the CAD 14.75m impairment reversal recorded in 2022.
Algoma’s product tanker fleet revenue increased by 11% to CAD 132.1m with all domestic tankers fully utilised during the year and additional revenue days generated by the introduction of new vessels to the fleet before the departure of retiring vessels.
Despite the higher revenue, segment operating earnings fell 37% to CAD 8.2m, reflecting the increased costs of dry-dockings last year.
Finally, revenue in Algoma’s ocean self-unloading bulk carrier segment was down 8% to CAD 178m and operating earnings decreased by 36% to CAD 25.7m, mainly as a result of more dry-dockings, resulting in 11% fewer revenue days.
“Despite rate pressures in some markets and a high dry-docking year, our solid 2023 financial results underscore our resilience and adaptability,” said chief executive Gregg Ruhl.
Algoma said customer demand for its domestic dry bulk vessels should be “relatively strong” in 2024, with all vessels expected to be in service.
“Opportunities for additional domestic and export iron ore, along with strong grain demand and steady construction volumes, are expected to offset a potential reduction in salt volumes driven by the mild winter in the Great Lakes/St Lawrence region,” it said.
In addition, the shipowner said the spring arrival of the 36,000-dwt Algoma Bear (built 2024), the newest Equinox class self-unloader, replacing the recently retired 34,100-dwt Algoma Transport (built 1979), is expected to drive an increased rate of earnings when coupled with contractual freight rate escalation and anticipated higher earnings from new business.
In the product tanker space, Algoma expects customer demand to be steady in 2024 and for fuel distribution patterns within Canada to support strong vessel utilisation throughout the year.
“Subsequent to 2023, two additional tankers were purchased. The vessels will initially be on bareboat charters back to the sellers,” it said.
“Following completion of their bareboat charters later this year, Algoma plans to begin trading one vessel in the company’s Canadian fleet and one in Europe.”
