J Lauritzen Holding, the privately-owned Danish dry bulk and small LPG carrier owner, has issued a profit warning after reporting deep interim losses and booking a heavy impairment charge.
Group net loss in 2Q15 amounted to USD117.6 million compared with a profit of USD27.0 million in the same period last year. Revenues fell to USD91.0 million from USD131.8 million.
The company booked a USD173.4 million impairment charge against its dry bulker fleet, the main reason the loss was greater than its revenues during the period.
For the first six months of the year, Lauritzen’s losses amounted to USD144.6 million compared with a profit of USD28.9 million in the same period in 2014. Revenues decreased to USD180.6 million from USD258.1 million.
“The dry cargo markets encountered during the first half of 2015 turned out to be the weakest for the last 30 years, severely impacting our EBITDA. Changing Chinese import patterns of permanent nature combined with the large number of newbuildings scheduled for delivery until the end of 2017 have, in our opinion, put dry cargo vessel values under pressure, resulting in impairments influencing our bottom-line result. Our gas carriers have continued to perform as expected,” said Jan Kastrup-Nielsen, President and CEO.
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In 1H15 operating income before special items (EBITDA) was negative by USD 41.0 million compared with positive by USD4.8 million the same period in 2014.
The group has revised its full-year EBITDA forecast to negative in the range of USD55 million to USD25 million, narrowing the earlier reported negative in the range of USD65 million to USD15 million.
The net loss is now estimated in the range of USD170 million to USD200 million compared with a previous forecast of a loss of USD135 million to USD80 million.
Cash and undrawn credit facilities amounted to USD155 million, down from USD284 million at year-end 2014, primarily due to bond repayment and negative cash flow from operating activities.
“At period-end, outstanding deliveries of wholly-owned and part-owned newbuildings amounted to eight for delivery in 2016-18. Financing of the wholly-owned newbuilding program has been in place since November 2014. Outstanding deliveries of long-term time-chartered vessels amount to 13, of which 11 with purchase options for delivery in 2015-17,” Lauritzen said.
“The very depressed market conditions for bulk carriers encountered in 1H15 is expected to continue and as earlier reported we still see significant uncertainties associated with the dry-market during 2015. Our expectations on gas carrier activities are unchanged,” the company concluded.