Altera Shuttle Tankers has delivered better than expected earnings growth even as revenue pulled back.
The Norway and Scotland-headquartered tanker owner, a unit of Brookfield Business Partners-controlled Altera Infrastructure, reported second-quarter net income of $33.9m, a significant improvement on just under $2.22m in the same period of 2023.
Revenue dipped to $124m from $136m, a decline that was blamed on lower reimbursable bunker purchases and the shift of the 151,000-dwt floating storage and offloading vessel Nordic Brasilia (built 2004) to conventional tanker trades, among other factors.
Arctic Securities analyst Alexander Jost said the results were stronger than predicted, with net time charter equivalent revenue coming in 7% higher than his investment bank predicted.
Ebitda of $68.9m was also 12% better than Arctic Securities’ estimate.
“The deviation compared to our estimates primarily relates to a stronger than expected COA [contract of affreightment] market, in addition to earlier than expected start-up of the Samba-class vessels (we had pencilled in some downtime to be conservative),” Jost wrote in a note to clients.
Altera Shuttle Tankers also benefited from the $40m sale of the Nordic Brasilia, which resulted in a $30m gain. The ship was sold to Ingvild Saether-led Altera Infrastructure and is slated to work on an Eni project in Ivory Coast.
It has been renamed FSO Yamoussoukro.
Altera Shuttle Tankers, which is tracked by analysts because of its Oslo-listed bonds, improved its leverage profile, with debt standing at 6.2 times Ebitda compared with 6.7 in the first quarter, according to Arctic Securities.
“We expect the first half of 2024 to mark the peak leverage ratio,” Jost wrote. “We expect material improvements in the credit metrics … as [Altera Shuttle Tankers] will benefit from the new time charters on the Samba class vessels and a stronger COA shuttle tanker market.”
The company said Altera Infrastructure intends to defend itself against Norwegian authorities’ allegations that it violated export control laws. It faces a NOK 9.6m ($900,000) fine.
And it said authorities in Oslo are challenging the tax value of three Altera Shuttle Tankers subsidiaries.
Jost called the two disputes “non-events” that will not affect Altera Shuttle Tankers’ cash.
