A profitable fourth quarter and improving chemical carrier rates could be moving a tanker spin-off quickly up the agenda at Norway’s Stolt-Nielsen.
The Oslo-listed group has been talking about an initial public offering of Stolt Tankers since 2017 — but the timing has never been right.
But the company is now coming off its best quarterly results in 14 years.
Chief executive Niels Stolt-Nielsen told a conference call with analysts: “I think that [for] an IPO at the right time, you need to have several quarters behind you showing the actual earning potential from a strong market, instead of trying to do an IPO based on the market [that] is coming.
“I want to have a couple of quarters behind us with good earnings.
“The reason we do an IPO of Stolt Tankers is that we haven’t lost faith in the chemical tankers and this is what we do, this is where we come from, this is what we’ll continue to do.”
He again emphasised the need to further consolidate a sector that he sees as too fragmented.
To have a stand-alone pure-play chemical tanker company that is publicly traded will make it easier to pursue tie-ups, Stolt-Nielsen believes.
“We can do a share deal, we can do a combination of shares and cash,” he said. “So it gives us better flexibility to pursue that goal of further consolidation.”
The group bought a 5% stake in tanker rival Odfjell last month, prompting merger speculation.
Cheap shares and low returns
Stolt-Nielsen described Odfjell and his own company’s shares as cheap.
“I think that this business, the chemical tanker business, hasn’t been sustainable for the last, I would say, 20 years,” he said. “If you look at what we have achieved in the last 20 years, it has been 5% return on capital employed, less than our cost of capital.”
The chief executive is convinced the market will be very good for another two or three years, but he added that this will not change the ownership structure of the industry.
“So the goal here is not for Stolt-Nielsen to reduce its exposure towards the chemical tanker industry, it is an aggressive move; it’s to separate out to seek opportunities or try to further consolidate the industry,” Stolt-Nielsen said.
Ready to go on IPO
“Timing-wise, if we have second, third quarter, I mean, if we see good earnings coming in, we are ready. We’ve been preparing this since 2017, so we are ready to go.
“We are big enough to do it ourselves, but I’ll keep you posted.”
The group’s fourth-quarter profit of $52.3m was the best three-month result since 2008.
More earnings could also be on the way as Russian disruption increases tonne-miles and reduces competition from conventional MR tankers in chemical trades.
The Stolt Tankers division reported operating profit of $25m, up from $12.9m a year ago, as rising bunker prices were more than offset by fuel surcharges and higher spot rates.
