US-flag tanker player Overseas Shipholding Group (OSG) has notched up a higher profit in the first quarter, boosted by improving markets.
Net income at the New York-listed company climbed to $12.1m from $10.1m in the previous quarter.
The contrast is even more stark with the first quarter of 2022, when the company was still spilling red ink to the tune of $509,000 in net losses.
Tanker markets have swung back in OSG’s favour since, allowing it to boost cash reserves and start buying back more of its common stock.
“The year has started well at OSG,” president and chief executive Sam Norton said. “All asset categories achieved financial results at or above expectations.”
Shipping revenue climbed 9.4% year on year in the first quarter to $113.8m.
Higher tanker rates and fewer days in lay-up were not the only reasons for the increase. OSG said it also benefited from the added employment of one of its vessels with the government of Israel.
Government business is set to increase after the Florida owner and operator of about 20 tankers agreed to put three of its ships in the US’ new Tanker Security Program (TSP).
The TSP, part of the 2021 National Defense Authorization Act, was modelled after the Maritime Security Program, which gives the US military access to 60 merchant ships in case of foreign conflict or national emergencies.
Norton said on Monday that his company “looks forward to further growth opportunities for its internationally trading US-flag tankers, both in the context of the TSP as well as in other supporting roles tied to our national security”.
Such business helped OSG more than offset a loss in revenue from the redelivery in December of three vessels it had leased from American Shipping Co.
Higher earnings allow OSG to reward investors more.
On March 17, it announced a plan to buy back up to 10m shares of its stock, or just over 12% of the total.
The company disclosed on Monday that by 31 March, it had purchased 498,000 shares for $1.9m.
