First Ship Lease Trust (FSL Trust) said it has been shoring up its balance sheet due to market uncertainty during the coronavirus pandemic.
In its quarterly report, the Singapore-listed owner of 17 tankers and boxships said it voluntarily prepaid $2.94m debt in the second quarter as part of its deleveraging efforts.
“Whilst we have seen a very firm tanker market in the first five months of the year…The market has corrected in June 2020 as a result of the combination of seasonality and the impact of the global pandemic on vessel demand,” chief executive Roger Woods said.
FSL Trust is still seeking employment opportunities for the 4,250-teu FSL Elixir and FSL Eminence (both built 2008), the two boxships that completed their 12-year charters to Taiwanese carrier Yang Ming Marine Transport last quarter.
“We continued to reduce debt and built a very robust financial position,” Woods said.
“Whilst we expect a rough sea ahead for the industry in the second half of the year, our strong financial position coupled with limited new tonnage entering the market, keeps us cautiously optimistic for the overall performance of the trust in 2020.”
The company's cash reserves stood at $33.3m as of 30 June, compared with outstanding debt of $39.7m.
Its equity ratio improved to 79% from 68% in end-June 2019.
FSL Trust has also decided to halt payout to shareholders after distributing a dividend of $0.015 per share in the first quarter.
“As we are not in a position to predict the full depths of the global pandemic and its impact on the shipping industry, we have decided not to declare a distribution to the unit holders for the second quarter,” chairman Stathis Topouzoglou said.
With a smaller fleet, revenue of the trust fell to $14.5m between April and June from $16.3m in the same period of last year.
In the first quarter, FSL Trust sold 109,670-dwt tankers FSL Piraeus and FSL Perth (both built 2006) and the 115,000-dwt FSL Shanghai (built 2007).
The company recorded a net profit of $1.3m in the second quarter, in spite of $3.27m in impairments on five ships. This compared with a profit of $2.03m between January and March 2019.
The vessels were the 20,000-dwt chemical tankers FSL New York and FSL London and 4,400-dwt specialised tankers Speciality, Seniority (all built 2006) and Superiority (built 2007).