Stolt Nielsen is to hold on to Stolt Tankers, having previously intended to list it.
Speaking on the Oslo-listed company’s third-quarter earnings call on Thursday, new chief executive Udo Lange said the company needed to see both a supportive tanker market and an IPO market before taking its world-leading chemical tanker segment public.
“We want to see the IPO market appropriately valuing the tanker business,” Lange said.
“As of today, we see the strong cash flows of Stolt Tankers supporting the dividends of Stolt Nielsen rather than an IPO for the foreseeable future.”
Spinning off its chemical tanker segment — a fleet of 90 ships, good for 2.8m dwt and the company’s largest single operating segment — was a long-held ambition for former chief executive Niels Stolt-Nielsen and had been discussed since 2017.
A listing looked close to the finish line earlier this year as chemical tanker markets strengthened but, in July, the company was hit with a $155m US court judgment over a 2012 fire, causing yet another delay.
Earlier this week, Clarksons Securities suggested the listing conditions would be ripe next year as product tankers move out of the chemical space and overall investor sentiment improves for tankers.
But Lange said he saw things the other way and said investors needed to be properly rewarding Stolt Nielsen as a diversified company with a tanker arm and viewed it purely as a shipping outfit.
“Too often, we are viewed as a shipping company only and therefore compared only to other tanker companies,” he said.
“This prevents Stolt Nielsen from being valued for our quality of net profit and our position as a leader in logistics and agriculture, which consistently pays out dividends.”
Lange took over from Nils Stolt-Nilsen in August after the latter stepped down following 23 years at the helm.
Lange is the first chief executive outside the Stolt-Nielsen family to run the London-headquartered company.
The German national comes from a logistics background, having served as chief executive of FedEx Logistics and held positions at DHL Global Forwarding and Lufthansa Sky Chefs.
The chemical tanker business drove $422m in operating revenue for the three months ending on 30 September, more than Stolthaven Terminals, Stolt Tank Containers and Stolt Sea Farm combined.
The segment was the focal point for equities analysts following Stolt Nielsen’s earnings release.
The company saw contract of affreightment (COA) rates jump 4.8% for the quarter, helping offset lower volumes. Similar offsetting was seen in the spot market, where volumes jumped 14.8% while rates fell 14.3%.
Fearnley Securities Oystein Vaagen said he expects positive adjustments for the tanker business in the fourth quarter due to those stronger COA rates.
“Considering the positive management comments regarding Stolt Tankers and its contract structure, we should see [fourth quarter] earnings rise from [the third quarter] despite some weakening in Stolt Containers” in the last three months of the year, Vaagen said.
Norne Research analyst Mindaugas Cekanavicius was also bullish on the tanker side.
“For tankers, [Stolt Nielsen] remains positive looking into 2024 that upcoming renewals will be made at strong rates and that the outlook for product tankers is improving,” he said.
