Ardmore Shipping is plotting the potential purchase of more tonnage and could charter-in additional tankers with the full impact of IMO 2020 on the product market just months away.
New York-listed Ardmore is charting how to replace two older vessels sold this year and is likely to dispose of a third veteran vessel with its 15th birthday on the horizon.
Ardmore - which today reported a smaller than expected first quarter loss - believes incoming emissions rules will start to be felt in July and August.
Chief executive Tony Gurnee said they will “kick into full gear” by the end of September.
Ardmore is anticipating a two-year run after IMO 2020 before the fuel market reaches a new balance, the executive said on a conference call today.
Evercore ISI analyst Jonathan Chappell pressed Gurnee on how he sees the company playing the upturn, including potential major acquisitions or simply harvesting cash.
Gurnee replied there was a need to balance priorities, with the firm’s executives having no incentive other than to maximize investor returns.
“That’s the compass we hold in our hands,” Gurnee said. “If we can achieve that through further growth we will.
“If the best way to achieve that is through debt reduction and ongoing dividend payments, we will do that.
Surrounded by consolidation
“We do realize the industry is consolidating around us and we need to be aware of that,” Gurnee added.
"We don’t think it’s a major issue for us at this point. But we do believe, and we have said this for a long time, with the right kind of growth we can improve our performance.”
Ardmore has sold the 47,000-dwt Ardmore Seatrader (built 2002) and the Ardmore Seamaster (built 2004) this year.
The 47,000-dwt Ardmore Seafarer (built 2004), which has attracted sales speculation during 2019, was also flagged as a likely disposal candidate today.
“We do intent to replace these over time,” Gurnee said on the call. “We do still like that middle age profile, ships that are six, seven, maybe eight, nine years old.
“We would not at this point be contemplating replacing them with newbuildings.”
Gurnee also left the door open for the company to charter in further ships.
“It’s always a possibility and something we have done in the past,” he said when pressed on the issue.
Ardmore today reported a first quarter loss of $0.08 per share, lower than the $0.12 per share loss consensus.
Wells Fargo analyst Mike Webber said Ardmore’s core MR tankers produced an impressive performance with rates of $15,900 per day beating his forecasts.
