Norden lowers sights

Struggles in both the dry cargo and products tanker markets have led Danish owner Norden to slice its full year profit forecast.

Copenhagen-listed Norden has also put a stop to new investment this year and revisited a strategy that aimed to boost spot exposure and raise gearing.

The developments came as the shipowner reposted a deeper loss for the second quarter, although not as bad as analysts feared.

Interim chief executive Klaus Nyborg explained: “The second quarter was more challenging than expected at the beginning of the year, and the 2014 markets have not yet met the expectations of a gradual improvement – neither within dry cargo nor tankers.”

While Norden is still hopeful of some rise in the depressed spot markets, it is now projecting an operational breakeven result at best this year.

It says core operating profit for 2014 will come in at between zero and negative $60m. Norden had previously guided for EBITDA of between negative $40m and a gain of $60m.

“The downward adjustment is driven by weak market development in both segments,” Norden told investors.

“Even though the dry cargo department has performed better than expected in the second quarter, it is more than cancelled out by an expected weak third quarter.”

Strategy tweaks

Last autumn Norden revealed a revised strategy to lift exposure to spot markets, continue investments primarily in dry cargo and raise its gearing.

“The poorer than expected markets will not influence Norden’s business model and overall strategy, but based on the market developments in the first half-year, the part of the strategy pertaining to market exposure has been evaluated and adjusted,” it said.

Its active dry cargo fleet has been reduced by 15% since the end of the first quarter and the company will not look to actively increase spot exposure.

 

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Norden added: “But it is also assessed that it will not be profitable to enter into a considerable number of future cargo contracts as long as the rate levels are as low as they are currently.”

Gearing has been increased since the new strategy was put in place, however, the present level is considered satisfactory.

TradeWinds reported earlier this year that Norden had placed investment on ice in the face of the weak market.

It said today: “Norden neither expects to make further investments in the core fleet in the second half of 2014. The company will instead seek to optimise value creation with the current fleet size with continued focus on fuel efficiency and optimisation of voyages and contracts.”

Loss-making quarter

The shipowner lost $41.60m in the second quarter, deeper than the $22.38m red figure at the same stage in 2013.

Its bulker division lost $29.97m and its tanker wing $6.41m.

A core operating loss of $7.4m was not as deep as the $10.4m projected in the market.

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