Ardmore Shipping saw its profits slide in the third quarter, but the decline was not as sharp as analysts expected as the New York-listed tanker owner benefited from markets that remained healthy during the seasonally slow summer.
The company also pointed to bookings so far in the ongoing fourth quarter that showed continued robustness for its product and chemical carriers as they hurtled toward the winter peak.
The Irish shipowner reported net income attributable to common shareholders of $20.3m for the period, down from $61m in the third quarter of 2022.
That equated to diluted earnings per share of $0.49, which investment bank Stifel said was better than the average analyst estimate of $0.44.
“MR and chemical tanker charter markets have remained robust through the typically slow summer months, with strong momentum leading into the seasonally stronger winter season,” chief executive Anthony Gurnee said in the earnings statement.
“In addition, the combination of low refined product inventories and increasing geopolitical risk has led to recurring stretches of pronounced market volatility.”
Ardmore reported that its MR product tankers earned a time charter equivalent rate of nearly $28,500 per day in the period, down from more than $32,800 per day a year earlier, but the company has locked in 50% of revenue days for the fourth quarter at a higher $30,100 per day.
It was a similar picture for its smaller chemical tankers, whose third-quarter TCE earnings of about $20,000 per day were below the $31,500 earned a year earlier. Fourth-quarter bookings, with 60% of revenue days fixed, are at an average TCE rate of $23,000 per day. The fourth quarter began on 1 October.
| Q3 2023 | Q3 2022 | Q1-Q3 2023 | Q1-Q3 2022 | |
| Net revenue | $86.9m | $142m | $297m | $313m |
| Voyage expenses | $30.6m | $46m | $98.7m | $114m |
| Vessel operating expenses | $14.4m | $13.3m | $44.6m | $45.8m |
| Net income attributable to common shareholders | $20.3m | $61m | $89.8m | $84.5m |
“Tanker supply growth remains constrained, with limited newbuilding deliveries and tight shipyard capacity through at least 2026,” said Gurnee.
Ardmore delivered third-quarter net revenue of $89.9m, down from $142m in the same period of 2022.
Voyage expenses also fell, to $30.6m from nearly $46m, while vessel operating expenses rose to $14.4m from $13.3m. The company paid income tax of $50,000 in the quarter.
The profit decline during the period was slim enough to keep the year-to-date figures in positive territory, with the company reporting net income of nearly $89.8m for the first nine months of the year, up from $84.6m in the same period of 2022.
Ardmore’s balance sheet showed $50.8m in cash and equivalents at the end of September out of $686m in total assets. The company’s long-term debt and lease obligations stood at nearly $103m, out of $132m in total liabilities.
Ardmore paid a dividend of $0.16 per share during the period, which was lower than the $0.19 paid at the end of the second quarter.
Among other uses of cash, the Cork-headquartered company pointed to its installation of modular exhaust gas scrubbers on two ships. The equipment allows tankers to burn cheaper high sulphur fuel oil, but Ardmore said these two systems are ready for carbon capture systems, as TradeWinds has reported. The company has ordered several carbon capture systems from Value Maritime.
Amid the dividend payout and scrubber investments, Gurnee said the company is sticking to its capital allocation policy.
“While we continue to assess potential growth opportunities on an ongoing basis, we have instead placed emphasis on the very high returns offered by the installation of performance optimisation and decarbonization technologies on board our existing fleet, all while paying our shareholders an attractive quarterly dividend and reducing our financial leverage,” Gurnee said.
“We believe Ardmore’s consistent focus on performance and progress places it in a strong position to continue building value, not just via spot exposure in these robust markets, but also via operational and financial efficiency over the long-term.”
Ardmore, which operates 26 tankers, reported 106,000 tonnes of CO2 emissions in the third quarter, up from 103m a year ago.
That brought emissions for the first nine months of the year to 420,000 tonnes, up from 375,000 tonnes a year earlier.
The company’s carbon intensity declined in the third quarter, with the annual efficiency ratio dipping to 5.8 grams per tonne-mile in the third quarter from 6.14 a year earlier.
But for the year up to 30 September, the figure grew to 6.1 grams per tonne-mile from 5.93 in the first three quarters of 2022.
