Stolt-Nielsen Ltd’s loss in US courts weighed on its second-quarter earnings, but tax benefits pulled its bottom line back into the black.
The Oslo-listed shipowner reported on Thursday a $113m profit for the three months ending 31 May — a figure whittled down by a $155m loss provision taken after a judgment against it in a US appeals court for its role in a fatal fire aboard a MSC Mediterranean Shipping Company vessel in 2012.
The quarterly result would have been a $20.4m loss, but a $28.7m income tax adjustment raised profits to $8.3m for the quarter.
Chief executive Niels Stolt-Nielsen said he remained “disappointed” in the ruling.
“It is a testament to the strength of the organisation that the company, even after taking a loss provision of $155m, maintains the liquidity and balance sheet strength to support its operations and pursue its strategy uninterrupted,” he said.
The $8.3m profit represents a drop from the $58.6m recorded in the second quarter of 2022, but the company still trumpeted the pre-adjustment $133m profit as a record quarterly result.
Revenue came in at $722m, a jump from the $689m reported for the same period last year.
Chemical tanker arm Stolt Tankers reported an operating profit of $96.8m, up from $87.1m for the second quarter of 2022.
Stolt-Nielsen said the increase in contracts of affreightment rose nearly 56% in the second quarter, despite modest volumes.
Adjusting for the provision, group Ebitda was $236m, against consensus of $201m.
Fearnley Securities said the adjusted earnings per share was a “staggering” $3.06, following a positive tax adjustment due to the loss provision.
The investment bank called the result solid, with Stolt Tankers continuing its strong earnings momentum.
The division’s adjusted Ebitda came in at $150m, above the Fearnley estimate of $137m.
The increase was driven by higher contract rates and improved spot volumes taking its sailed-in revenue just north of $30,000 per day for the first time at $30,880.
This was up 6.2% quarter on quarter.
Stolt-Nielsen Gas, which has stakes in LNG carrier owners Avenir LNG and Golar LNG, lost $2.7m up from the $3.4m loss year over year.
Its tank container business made $39.7m for the quarter and its aquaculture outfit $4.4m.
Stolthaven Terminals brought in $27.8m, up $2.7m from last year, as throughput increased.
The $155m loss provision came following a decision from the New York-based US Court of Appeals for the Second Circuit assigning Stolt Tank Containers 45% liability for a fire aboard the 6,732-teu MSC Flaminia (built 2001).
Deltech, a Louisiana chemical producer, is responsible for the remaining 55%.
Stolt Tanker Containers had 29 containers on the vessel, including three stowed in the cargo hold where the fire broke out.
Stolt-Nielsen Ltd had been challenging a 2018 ruling from the US federal court for the Southern District of New York.
Full-year outlook
In its quarterly earnings report, Stolt-Nielsen Ltd warned that Stolt Tankers could struggle for the rest of 2023.
The company said it earned high spot and contract of affreightment rates in the first half of the year, with most of the benefit coming in the second quarter.
But it said the market would soften in the third and fourth quarters “due to an economic slowdown and fewer imports into China in the near-term”.
Still, it was confident longer term.
“Despite macroeconomic and geopolitical concerns, the outlook remains optimistic for the chemical tanker segment,” it said.
“This is due to a favourable supply/demand balance, as demand for chemical tankers continues to grow while the orderbook for new ships remains at its lowest point since 1996 with limited yard capacity available.”
