Odfjell has reported its first profitable quarter for 2021 in what it described as a “challenging and unpredictable” year.
The Kristian Morch-led shipowner made $15.4m in the fourth quarter, but it wasn’t sufficient to prevent it posting a full-year loss of $33.2m.
“2021 was another challenging and unpredictable year for Odfjell impacted by the Covid-19 pandemic and a weak CPP market,” said Morch.
“We continue to operate well despite the challenging environment, and we are also ahead of our ambitious plan to reduce emissions.”
The chief executive said that while he was “not satisfied” reporting negative results, he was encouraged by the quick recovery seen during the fourth quarter.
Odfjell Tankers reported time charter earnings for the quarter of $136m, up $11m compared to the $125m achieved in the prior quarter.
Strong finish
Norne Securities said the results were very encouraging and ended a challenging year with "a great fanfare."
The revenue was the highest in 10 years, the investment bank added.
“The next quarter was guided slightly lower due to seasonality, but the longer-term market outlook remains strong,” Norne said.
The fourth quarter had been guided to be in line with the previous quarter, but ended up much stronger.
Ebit was $35m, compared to a loss of $7m last quarter.
The result was boosted by $1.7m in vessel sale gains.
Analysts’ consensus had suggested a loss for the quarter.
TCEs improve
“The improved TCE reflects a strong market in the eastern hemisphere and an improved market in the western hemisphere,” Odfjell said.
Break-even for the full year 2021 ended at $21,192 per day, which is expected to be further reduced to $21,800 per day this year due to a decrease in trading days following vessel sales.
Odfjell said the chemical tanker market improved in the fourth quarter as freight rates on Asian exports to Europe and the US remained strong and US exports began to improve on several routes.
“The pick-up in US exports occurred together with reduced supply in the region and improved momentum in the CPP market, which combined lifted freight rates and led to a stronger market at the end of the quarter,” Odfjell said.
“Total volumes shipped increased during the quarter and was mainly driven by increased COA volumes. While US exports improved, spot volumes were still subdued.”
During the quarter Odfjell said it experienced Covid-19 cases on board its vessels, which impacted our operations and scheduling negatively.
Odfjell said it has now successfully vaccinated 95% of its crew, but that timely crew changes remained a challenge.
Looking ahead, Odfjell said global demand for chemicals rebounded in 2021, as the reopening of economies boosted demand for goods.
“Growth in liquid chemical tanker demand followed suit but was more muted due to supply chain challenges in the US and inventory destocking depressing the crude and product tanker markets,” the shipowner said.
“As lockdown measures become less stringent, downstream industries including automotive and construction are forecasted to ramp up further in 2022.
“Combining this with expectations of easing supply chain and inflationary pressures, this supports a positive outlook on chemical tanker demand in 2022.”
