ADS Crude Carriers believes it is well placed to profit from tanker markets despite massive uncertainty due to coronavirus.
Chairman Bjorn Tore Larsen said in the annual report that the VLCC owner will continue to pay dividends, in contrast to many shipping companies that are preserving cash during the crisis.
"I do not know what the long-term economic consequences of this virus will be, but short-term it is clear that it will have a major impact on the financial markets and world trade," he wrote.
"This does not necessarily mean that the tanker market will be weak, as the supply and demand ratio of tankers is influenced by many factors, a number of which are dynamic and unpredictable, such as oil price and contango, storage, sanctions, and security issues."
Volatility likely
Larsen described the market as volatile and hard to forecast.
"If the market is to be strong over the next couple of years — as many market analysts have forecast — our company will be well positioned to generate significant profits and cash flow," he added.
The chairman pointed to the company's low cash break-even levels and pledged to deliver all free cash back to shareholders as dividends.
He said it remains unknown how long restrictions on travel and transport will be in place and whether things will get worse before they get better.
"With respect to the company’s vessels there have been no significant issues with health, safety or restriction of operations related to Covid-19 so far, though like a number of other vessel operators all crew changes have been temporarily suspended," he added.
But an increasing number of restrictions on port operations and similar measures are being implemented by authorities, and vessel operations represent an activity with major exposure, he said.
"The macro-economy has already been impacted by Covid-19 but it is unknown how long this will last, the effect on the tanker market and on the company," he concluded.
The Oslo-listed operator, which owns three VLCCs, has been unable to make any financial forecasts due to the outbreak.
