Norway’s Odfjell has logged its best-ever profit for 2023 — and sees more to come in what it called “inefficient” shipping markets.

The Oslo-listed chemical tanker and terminals group said net earnings came in at a “strong” $52.1m in the fourth quarter, up from $50.4m in 2022 as financial costs fell.

Revenue dropped to $296m, compared with $318m the year before.

The company called the result “solid” and said the full-year profit of $203.3m was a record.

Earnings rose from $141.6m in 2022.

The dividend is $0.63 per share for the fourth quarter.

Rates for renewed contracts of affreightment in the quarter were up 5% on average, covering 29% of estimated annual contract volume.

This provides a solid foundation for all Odfjell’s trades and reduces earnings volatility going forward, the owner said.

Odfjell added that geopolitical tensions and the Panama Canal drought led to inefficiencies that increased vessel utilisation, in turn supporting higher rates.

“Since early December, we have not been sailing through the Red Sea,” chief executive Harald Fotland said.

“The market balance is tight, and added inefficiencies from the restrictions in the Panama and Suez canals will likely contribute to even higher fleet utilisation,” he added.

Activity at high levels

Odfjell explained that for voyages that had already started, rerouting away from the Red Sea had a negative effect.

But fixtures from mid-January had their rates adjusted to reflect the longer trip.

“In sum, we expect our earnings to increase slightly in the first quarter of 2024,” Fotland said.

Activity remained at high levels in the final three months of the year, with the tankers carrying 260,000 tonnes more contract cargo compared with the previous quarter.

The COA share of total volumes climbed to 60% from 54% between June and September.

The company is now well into peak renewal season, working on more new deals.

The spot market started to improve in the second half of the third quarter, and rates increased further in the fourth quarter.

“All in all, the chemical tanker supply/demand balance looks strong both in the short and medium term. Supported by sound fundamentals also in the product tanker market, there is reason to believe that cycle will remain at healthy levels in 2024,” Odfjell said.

Arctic Securities said the Ebitda result of $108.7m was slightly below consensus.

Looking ahead, the investment bank said: “An Ebitda improvement of 12% to 14% is a best-case scenario, and we believe estimates could slide slightly on the back of the report.”

Fleet renewal continues at the shipowner, with 12 new stainless-steel ships of between 25,000 dwt and 40,000 dwt coming in on long-term charters and pool deals up to 2027.