BW LPG, the world’s largest VLGC operator, has reported a rise in interim results on the back of strong US exports and Asian imports, while the outlook remains bullish, the company said in a statement.
Group net profit in 2Q15 rose to USD80.6 million from USD72.4 million in the same period last year. Revenues fell slightly, to USD189.6 million from USD202.9 million.
In 1H15 the profit amounted to USD137.9 million compared with USD103.2 million a year earlier. Revenues increased a fraction, to USD357.6 million from USD353.7 million.
“Robust growth in US export volumes and Asian imports has underpinned longer shipping distances, increasing tonne-mile demand strongly and resulting in tight availability of LPG carriers – in particular VLGCs and LGCs,” said the company, which has 33 VLGCs and five LGCs.
“Therefore both the spot and time charter markets experienced sustained strength throughout the first half of 2015 as VLGC spot rates experienced a quarter-on-quarter increase of 16% and year-on-year increase of 3%,” BW LPG added.
On 20 July 2015 the company was granted an option from a subsidiary of BW Group Limited to purchase a total of 6.0 million shares that represent 10.2% of the total equity interest in Dorian LPG Ltd, a company listed on the New York Stock Exchange at a price of USD15.34 per share, amounting to a total of USD92.0 million. “After careful deliberation, the company has elected not to exercise the above option,” said BW LPG, which is controlled by the Singapore-based BW Maritime group.
Commenting on this, Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Arctic in Oslo, said that BW LPG had made a natural decision given that shares in Dorian LPG traded substantially below the option price. “However, we would not rule out BW LPG taking the Dorian stake at a later stage,” they said in a commentary emailed to IHS Maritime.
Moving on to the outlook, BW LPG said the expectation for 2016 is continued positive development in demand. “There is some degree of risk to US LPG production if oil prices remain low, albeit so far there has been no negative impact on availability of LPG to meet export demand.”
However, the increasing rate of VLGC newbuilding deliveries is likely to result in some degree of further softening in charter rates from the relative highs experienced in 2014 and 2015. “The build-out of the VLGC fleet has been supported by a robust expansion in US export terminal capacity in 2015, with even stronger growth expected in 2016,” the company said.
“Beyond 2016, the LPG export market is anticipated to continue growing, with supply of US export LPG, global LPG import demand, and incremental newbuild[ing] ordering all having the potential to significantly impact the charter rate environment,” BW LPG stated.
“BW LPG continues to grow its fleet, having already taken delivery of four VLGC newbuild[ing]s, with a further two deliveries expected in the second half of 2015 and six in 2016, enabling us to ensure our market leading position in LPG shipping,” the company concluded.