Niels-Stolt Nielsen said the lack of new chemical carrier orders will lead to a sector rebound — and possibly to the long-awaited initial public offering of his company's tanker business.
Writing in the company's annual report on Thursday, the chief executive said the coronavirus outbreak is likely to affect markets, but the declining newbuilding orderbook should see the company experience a favourable supply-and-demand balance during 2020 and beyond.
"We saw some recovery towards the end of 2019 resulting in a healthy increase in those COA [contracts of affreightment] rates, which were renewed in the fourth quarter," he said.
He said it was still too early to assess the impact of Covid-19.
"I personally believe that once the panic settles, markets will recover quickly and global trade will continue to grow at a multiplier of global GDP [gross domestic product]," he said.
The chief executive said incoming environmental regulation, as well as the decabonisation drive by lenders and investors, is contributing even more to his medium to long-term optimism about the company's shipping division, as its impact on ship orders leads to lower capacity in the market.
"Who would risk ordering a ship today that may be technologically obsolete in a few years?" he asked.
Well-prepared for IPO
Looking further ahead, Niels Stolt-Nielsen said the Oslo-listed company is "well prepared" for an IPO, "but we will only do this when the market conditions are right and earnings have recovered".
The spin-off of the chemical tanker operations from the sea farm and terminals business has been in the works since the $575m takeover of Jo Tankers in 2016, with work having been carried out to leave it in a position to be a stand-alone company.
But the CEO said uncertainty in its markets will continue into 2020, not least because the macro-economic effects of the coronavirus outbreak are currently unknown.
"I believe that longer-term we are well-positioned in each of our segments to ride out the storm and to grow once the uncertainty is removed."
Earlier this month, the owner cancelled a dividend payout amid the stock market turmoil caused by Covid-19.
In early February, it raised $140m by selling senior unsecured bonds that will expire in 2024.
The company recorded a net profit of $19.1m for the financial year to 30 November, down from $54m in the previous year. Revenue decreased to $2.04bn from $2.13bn.
