Scorpio Bulkers has had a positive second quarter, beating analysts' estimates and booking strong paper profit on its much-maligned investment in its product tanker sibling.
The New York-listed shipowner has added to its operated fleet and is divesting more of its owned tonnage, according to its latest financial report.
Scorpio said it has time chartered in another four kamsarmax bulkers, but did not reveal any further details about the deal.
At the same time two of Scorpio's ultramaxes have been classified as "held for sale" but the specific vessels were not disclosed.
The second quarter saw Scorpio close the sale and lease back of 16 vessels, which it said will bring in $144.5m in total additional liquidity, including scrubber financing.
Sister stake helps swell profit
Investment in Scorpio Tankers has paid off for its sister company, despite continued criticism of the move from some analysts.
Scorpio Bulkers made a $53.1m non-cash gain and cash dividends from investing in the tanker company.
This helped Scorpio Bulkers post net profit of $35m or $0.50 per share for the second quarter, which is a significant improvement compared to $0.8m in the same period in 2018.
The net result includes a $7.7m write-down of the two ultramaxes held for sale and write-offs of deferred financing costs related to two kamsarmaxes sold previously and to refinancing the company's existing debt.
Excluding these one-time items, Scorpio's adjusted net income for the quarter was $40.1m or $0.58 per share.
“While the STNG investment is certainly not an operating beat, it directly impacts NAV which is the preferred valuation methodology in the space,” said Deutsche Bank analysts led by Amit Mehrotra.
Analysts at Arctic Securities said operating figures were ahead of expectations driven by stronger than projected rates.
They noted the third quarter guidance was weaker than they had hoped, but said remaining days should be booked at a higher level given market developments.
“The share should trade somewhat ahead of the market on the back of the report,” said analyst Jo Ringheim.
Scorpio’s board has declared a dividend of $0.02 per share, which is in line with analysts' estimates.
