Western Bulk's second-half results have taken a tumble, thanks to a former employee's faulty hunch on where the company's Chilean business was headed.
"In Chile, it was revealed that contracts had been approved based on unrealistic assumptions based on a trusted employee, combined with the market moving against the positions and weather delays," the Jens Ismar-led company said.
"The Chile unit has been restructured, the employee has been removed from his position and internal control routines have been reviewed and enhanced."
Western Bulk posted a $600,000 profit for the last six months of 2018, down from $6.4m in the same period last year.
Net revenue came in at $31.6m versus $40.5m a year earlier, mostly due the Chile business posting a $10m revenue loss.
That segment is expected to have zero revenue this year because most of the loss-making contracts in Chile end in the first quarter.
It is also more focused on short-term contracts in line with other business units, the company said.
"After ending both 2017 and the first half of 2018 with increase in profitability, the last six months of 2018 was disappointing due to losses in Chile," chief executive Jens Ismar said.
"At the same time, with the Chile business unit restructured and a good fourth quarter I am convinced that we will be able to better reflect the strong performance in the remaining business units on group level in 2019."
2019 outlook
The company is expecting a "fragile recovery" with a risk of negative sentiment in the drybulk market due to marginal differences between supply and demand growth.
"Combined with periods of political uncertainties, this is likely to result in periods of imbalance and volatility," the company said in its earnings report.
The company expects some market support as IMO 2020 approaches with ships drydocked for shorter periods to clean fuel tanks or install scrubbers.
It also foresees a a seasonal fall in China before its New Year following lower Chinese winter coal demand but a rebound after New Year due to new construction a post-holiday restocking.
