First Ship Lease Trust (FSL Trust), a Singapore-listed tanker owner, reported on Thursday a narrow profit for the last quarter of 2021 and expressed confidence it can ride out stubbornly poor freight rates.
Net income at the Efstathios Topouzoglou-controlled company stood at $88,000, compared with a loss of $2.2m in the same period of 2020.
FSL Trust owns nine product tankers, one chemical tanker and an aframax. Eight of its product tankers operate on firm, fixed-rate bareboat charters to James Fisher Everard.
That long-term employment helped the company stay in the black despite a disappointing winter season for tanker freight rates, chief executive Roger Woods said.
Other factors that helped it eke out a profit in the fourth quarter were lower depreciation expenses and the absence of about $3m in vessel impairments it had booked in the fourth quarter of 2020.
Chairman Topouzoglou said FSL Trust’s current set-up allows it to cope with adverse markets for quite some time yet.
“With 75% of the remaining portfolio on long-term employment, we can weather a continuation of the depressed tanker market as long as it lasts,” he said.
Ship sales and refinancings
FSL still distributed no dividend for the fourth quarter as it slipped into the red for the full year, booking a net loss of $1.5m as revenue shrank by nearly half to $25m.
Topouzoglou said the company is looking “at new opportunities” to “deliver sustainable returns” to shareholders.
According to the Greek businessman, FSL Trust read the tanker market correctly in 2021 and “protected substantial value to unitholders” through the sale of two LR2 newbuildings, as well as a 15-year-old chemical tanker and a 14-year-old MR.
Ship sales and refinancing deals helped it cut debt and its exposure to weak spot markets. According to its financial statements, the company has just $3.4m in secured bank loans repayable within 2022, down from $16.6m last year.
It would have offloaded one more ship, the 20,000-dwt FSL London (built 2006). The agreed sale was, however, thwarted over a customs investigation that delayed the transaction and still causes the vessel to remain idle.
This wasn’t the first time that authorities meddled with a sale the company had agreed. Last March, the Singapore Exchange asked it to obtain shareholder approval before divesting its pair of LR2 newbuildings.
FSL Trust complied with authorities’ request and the sale to Libya’s General National Maritime Transport Co went through a few weeks later.
