Western Bulk, the listed Norwegian dry bulk shipping group, remained in the black in 1Q15, and it retains a cautious outlook on dry bulk market prospects.
Group net profit in 1Q15 remained unchanged from last year at USD5.5 million, while revenues dropped to USD275 million from USD342 million.
The company said with dry bulk rates at historical low levels and weak demand development in the first three months of 2015, both reduced supply growth and greater demand is needed before rates will edge back up. “There are clear signs of actions being taken to reduce the orderbook of new vessels and increased scrapping of older tonnage: a necessary action that should have a positive effect on the supply and demand balance over time. Western Bulk expects the low rates to continue for the remainder of the year,” the company said in a statement.
WB Shipholding, which owns 14 dry bulk carriers and has 9 newbuildings on order, continues to trade the vessels mainly on short-term employment. In the current market, and with its high-quality, fuel-efficient Japanese tonnage, the division believes it gets better value from trading the vessels short term than what is obtainable in the long-term period market.
“At the current rate levels, WB Shipholding is producing negative results as the market rates are significantly below the charter-in cost of the fleet. With rates expected to continue at low levels, Western Bulk expects a slightly more negative net time charter [TC] result in 2Q15 than in 1Q15 in WB Shipholding,” the company said.
WB Chartering, which charters in vessels and fixes them with third parties for employment, is expected to have a fleet of around 150 to 160 vessels in 2Q15, and the net TC margin per ship day is expected to stay at around the same level as in the previous quarter, or slightly less as the market has continued to deteriorate. “Legacy losses from the division’s previous long position on tonnage are expected to be somewhat less in 2Q15 than in 1Q15 and largely offset with base margin from cargo contracts for 2Q15 concluded during 4Q14 when this long position was reduced. Western Bulk expects a similar and slightly lower net TC result in 2Q15 than in 1Q15 in WB Chartering,” the company said.
Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Artic in Oslo, said the management’s market outlook remains muted as they do not expect any near-term recovery in freight rates. “Their base case expectation for 2015 in net fleet growth is similar to demand growth. The increase in scrapping, paired with more newbuildings being delayed or cancelled, is expected to give positive effects from late 2015 into 2016,” they said.