Odfjell, the Bergen-based chemical carrier and tank containers group, has reported increased losses in 1Q15 on soft market, but said it expects the current quarter to be better.
Group net loss amounted to USD32 million in 1Q15 compared with USD23 million in losses in the same period a year earlier. Revenues dropped from USD290 million to USD260 million.
In the group’s core chemical carrier business, the time charter earnings index closed at 3% lower than the previous quarter. “The activity in the quarter was steady, both with respect to our contract and spot cargoes. Operational challenges related to the ship-channel closure in Houston, coupled with seasonal weather delays and general congestion, influenced our operational performance and earnings negatively,” the company said.
The chemical carrier business doubled its net loss to USD28 million in 1Q15 compared with the same period last year, while revenues plummeted to USD229 million from USD263 million. “Contracts are mostly being renewed at higher rates, and bunker clauses are being adjusted for the lower prices. Contract cargoes in the first quarter account for about 50% of the total freight volume,” Odfjell said.
The tank terminal business cut its net loss to USD4 million in 1Q15 from USD7 million in the same period last year. The upturn was helped by the gradual return to normal business in Rotterdam after an extended period of problems and work on the facilities.
The company last year unveiled a cost-cutting and efficiency programme that has now been running for three months. “Head-count reductions and other cost-cutting initiatives are progressing as planned. Energy efficiency initiatives are on schedule and will take full effect in 2016. Implementation of market initiatives related to fleet optimisation and other improvement measures will take longer than first planned,” Odfjell said.
The company repeated an earlier stated goal to implement initiatives that will improve its net result by in excess of USD100 million on a yearly basis before the end of 2016.
Looking ahead, Odfjell expects 2Q15 to improve for its chemical tankers from the previous year on a further reduced cost base and improved earnings. “With regard to our terminals, we expect increased earnings due to capacity expansions and continued positive development at Odfjell Terminals [Rotterdam],” the company said.