DS Norden, the Danish-listed dry bulk and product tanker group, has raised its operating profit forecast (EBIT) for the second time in two months after its tanker business delivered record interims.
Group net profit in the first half 2015 (1H15) amounted to USD81.9 million compared with a loss of USD68.1 million in the same period last year. Revenues decreased to USD879.5 million from USD1.06 billion.
“Norden raises its expectations for EBIT to USD70 (million) to USD100 million against the previously expected USD50 (million) to USD90 million,” the company said in a statement. On 24 June, it had raised its EBIT forecast to the last-named figures from negative by USD40 million to positive by USD40 million.
EBIT expectations for the group’s tanker business of 50 vessels, including newbuildings, were increased to USD90 million to USD 120 million from previous forecast of USD75 million to USD 100 million.
However, expectations for the dry cargo business area’s result were maintained at negative by USD 25 million to break-even. Norden’s dry bulk business entails 218 ships, including newbuildings on order.
The product tanker business generated an EBIT of USD33 million in 1H15, a major improvement from a figure negative by USD6 million a year before and a new record for the business area.
“The newly opened refineries in the Middle East – Jubail, Yanbu, and Ruwais (1.2 million barrels per day) – were close to being fully operational at the end of the second quarter. In addition to exports of especially jet fuel to Europe and diesel to Brazil, products from these new refineries are also beginning to find their way to other parts of South America, which otherwise have been dominated by supplies of American oil products in recent years,” Norden said.
However, the product tanker fleet has seen higher growth than expected in 1H15 as the attractive tanker market has reduced scrapping activities significantly, and scrapping in the review period was therefore 60% down from the same periods in the last two years. “In contrast, the number of delivered newbuildings has been above expectations,” the company said.
“Provided that the trend will continue throughout the year, net fleet growth for the whole of 2015 is expected to surpass the previous estimate of 5-6%. MR and LR2 are the vessel types which so far this year have seen the greatest growth rates of 5% and 8.5%, respectively, however, this is being counterbalanced by low fleet growth in the crude oil tanker fleet,” it added.
The group’s dry cargo business area reported EBIT positive by USD6 million in 1H15 compared with a figure negative by USD18 million in the same period last year. This was due to measures taken at the end of 2014 to bring down the charter rate of vessels chartered in from Japanese principals and to a USD6 million claims settlement.
“Despite positive market developments during the last weeks of second quarter 2015 and the beginning of third quarter 2015, Norden maintains the assessment that the structural improvement of the dry cargo market remains insufficient to create a significant boost in rates. Temporary influences such as the usual seasonal factors and potential Chinese stockpiling of iron ore are, however, expected to lead to higher rates in the second half-year of 2015 than in the first half-year,” the company said.
This post was sourced from IHS Maritime 360: View the original article here.
