Balance-sheet boosting is paying off for Odfjell, as demand outstrips its vessel supply.
The Norwegian chemical carrier owner said demand is growing faster than the number of ships it has available, and "will continue to do so in the coming years", according to chief executive Kristian Morch.
"The fundamentals strongly suggest that 2019 marked the end of a decade with historically rough markets, but the emergence of unforeseen events like Covid-19 and its potential effects on the world economy could have a significant impact on the demand picture for a period of time," he added in the company's annual report.
Odfjell has been busy building up its fleet through charters and newbuilding orders, while selling off some of its tank terminal interests to improve the balance sheet.
"Coupled with all the initiatives we implemented over the last few years, we now operate from a competitive and robust platform, prepared to meet current and future demands," Morch said.
"The medicine is beginning to work."
He added that 2019 marked a year of improved results and it is now focused on becoming profitable again.
Demand to keep growing
"We have improved our performance, stabilised our set-up, and are now delivering solid results on safety, operational performance, vetting, and efficiency," he said.
Odfjell is forecasting demand for chemicals to grow by 30% this decade.
It expects to see "an acceleration of structural changes in the chemical industry that will affect chemical tankers," it added.
Morch said demand prospects look "fundamentally healthy", and slower supply growth bolsters chemical tanker market recovery.
"However, we are currently witnessing a pandemic which has the potential to seriously affect the global economy, and we will not be unaffected by such effect," he said.
Bigger and greener
Fleet renewal continues to be important to the company.
The first two of the world’s largest stainless-steel chemical tankers entered the fleet in 2019, and two 49,000-dwt sisterships will follow in the first half of 2020.
"These four vessels mark a milestone in Odfjell’s history, and are flagships in our renewed fleet," Morch said.
"As of today, these ships are the most environmentally-friendly in the market. All of the 30 new vessels that enter our fleet between 2017 and 2020 utilise innovative technology and contribute to a more sustainable and more efficient fleet."
For the fourth quarter, Odfjell recorded a net loss of $10m, compared to a loss of $47.6m in the same period a year ago.
Revenue edged down to $235m from $241m, but Ebitda for its tankers rose to $50.1m from $27m as spot rates on the main trade lanes increased 12% from the third quarter.
"We believe the fundamentals of our markets have changed, that we will return to profitability and generate returns for our shareholders," Morch concluded.
"We are, however, not immune to a correction in the global economy. We do what we can to be as prepared as possible."
