Fourth-quarter earnings for US-listed Dorian LPG look likely to come in below analysts’ forecasts as VLGC rates remain disappointed.
In a results update, the company said time charter equivalent (TCE) revenue will be between $66.8m and $68.8m for the October to December period.
This compares with the $88.5m achieved in the final quarter of 2020.
Fearnley Securities said the guidance at its mid-point suggests an average rate of $33,000 per day in TCE terms, and Ebitda of $39m.
“This is virtually spot on our observed market rates for the quarter, but some $2,000 below our estimate,” the investment bank said.
Lower than expected
“This is somewhat below our $43m estimate, owing to both lower-than-expected achieved rates and costs coming in $2.5m higher than expected,” Fearnleys said.
So far this year, VLGC rates have started on a strong note with an average just shy of $50,000 per day.
However, Fearnleys’ estimate for the full quarter is at $33,500.
“Freight has remained under pressure in recent weeks despite a slight bump in activity this week,” analysts Peder Nicolai Jarlsby, Erik Gabriel Hovi and Ulrik Mannhart said.
“On the face of it, there is seemingly ample vessel supply in the US Gulf for February loadings, but owners are also holding back and resisting to participate in the downward spiral,” the analysts said.
Rates drop 39% in a month
The Baltic Exchange VLGC index for Middle East to Asia trips was softer at $57.30 per tonne or $32,300 per day on Wednesday — down 4.8% from the day before and 39% month on month.
Dorian LPG's Ebitda for the fourth quarter of 2020 was $60.1m.
The shipowner’s guidance also revealed vessel operating expenses, including drydockings, will be in the range of $17.2m to $19.2m.
Charter hire expenses will be between $4.8m and $5m.
General and administrative expenses, including stock-based compensation and certain cash bonuses, will be somewhere in the range of $5.4m to $6.4m.
The company logged 2,024 operating days, with a utilisation rate at 98.5%.
Cleaves Securities said VLGC rates had dropped 28% week on week as a narrowing product arbitrage window halted activity and caused tonnage to build up in the Middle East.
Reports of expected downtime due to refinery maintenance in Saudi Arabia may pile further pressure on rates near-term.
