Swedish shipowner Stena AB has received a big vote of confidence from Clarksons Securities despite lower third-quarter earnings.

The investment bank believes the Olsson family-controlled tanker, LNG carrier and ro-ro group remains “a great credit story”.

The group posted net profit of SEK 984m ($94m) for the third quarter, down from SEK 1.5bn in 2022.

Revenue dipped to SEK 14.4bn, against SEK 14.8bn.

Deputy chief executive Annika Hult said ferry volumes remained strong after an exceptional post-Covid 2022, offset by a softer freight market and increased costs compared with last year.

Cargo shipping increased operational Ebitda as a result of higher rates for tankers, and ro-ros had bigger earnings due to a larger fleet, she added.

Tanker Ebitda rose SEK 565m to SEK 2.6bn in the first nine months, as MR and suezmax rates improved.

Clarksons Securities managing director Jonas Bito Shum said: “For several years, I have held a positive view of Stena’s creditworthiness due to what I perceive as a solid credit story.

“Throughout its more than 80-year existence, the company has incurred losses only once, and that was during the unprecedented 100-year pandemic.”

Profit reinvested

The Olsson family has consistently reinvested more than 90% of the company’s earnings in the business over the past 23 years, the analyst pointed out.

“I believe it is vital to recognise that the cyclical nature of Stena’s operations has undergone a significant transformation,” he said.

“In 2015, nearly 40% of the company’s assets were tied to highly cyclical sectors such as offshore drilling and tankers. Today, this proportion has decreased to around 20%.”

Up to SEK 10bn of annual Ebitda is now derived from stable and less cyclical sources, including ferry operations and Stena Roro ships operating on long-term charter contracts.

As the company looks ahead and expands its operations, Clarksons Securities is factoring in investments totalling SEK 21bn through 2026, with SEK 7.3bn allocated to newbuilds.

These include ropaxes and a drillship that will bolster earnings stability and capacity, the investment bank said.

The group has 38 ferries servicing 17 northern European routes, plus three LNG carriers, 11 ro-ros and 65 tankers.