Swedish tanker giant Stena AB is hopeful of a better market this year after its loss grew in a "very disappointing" 2018.
The group posted earnings before tax of SEK 105m ($11m) last year, down from SEK 1.34bn in 2017, due to property sales.
Revenue grew to SEK 34.73bn, against SEK 33.72bn the year before.
But CEO Dan Sten Olsson said the global shipyard industry "continues to have excess capacity compared to the demand for vessels."
"The transition to reduced production of vessels takes time, and there is an excess supply of virtually all types of vessels," he added.
"Nonetheless, it appears that the balance between supply and demand for tankers and gas carriers during 2019 will be more favourable than in 2018, which was a very disappointing year, except for the fourth quarter."
Choppy waters
The group said its tankers, LNG carriers and rigs face significant market fluctuations.
"For some time, we have therefore built up our property activities, mainly comprising of rental housing," Olsson said.
"Due to a large realised gain on the sale of approximately 20% of the portfolio, we can report a positive result for 2018."
He added: "Our operations are in better balance in 2019."
But the drilling activities are not likely to contribute a positive cash flow before 2020, despite the units being fully employed.
"This operation is burdened by high capital costs, and besides managing our other activities, we have safeguarded our future with a high liquidity reserve, currently amounting to just over SEK 17bn," Olsson said.
Tanker fleet renewed
The Stena Bulk division has 103 tankers.
It has now taken delivery of the 13 IMOIIMAX vessels ordered in 2011.
The vessels can handle both chemical transport and other loads and have performed above expectations in the logistics system comprising around 60 to 70 vessels in the MR and IMOIIMAX classes, Stena said.
The Stena Line ferry operation had a strong year.
"Unless the supply of ferry capacity increases substantially, we believe that the favourable results will be maintained in the coming years," Olsson said.
"We are planning major redeployment of the fleet in 2020. Stena Line has five vessels on order, and these will be deployed where we currently have capacity constraints.
"Based on redeployment, we will only need to sell one vessel when the new vessels arrive."
Four of the new ships will be chartered out long-term.
Ro-pax prospects good
The Stena RoRo business also enjoyed a strong market in 2018.
The company said that in coming years, there is much to indicate the increased addition of mainly new ro-ro ships.
This will exert pressure on margins.
In the ro-pax market, development will be strong, however, "since in principle no speculative newbuilding orders are placed," it added.
"There is also political uncertainty in Europe, as well as unrest about the outlook for the transport fleet after a possible Brexit 2019," Stena said.
"Stena RoRo is monitoring developments closely and, with a well-balanced fleet comprising of both ro-pax and ro-ro vessels, is ready for various scenarios."
