Odfjell targets fleet of 100 ships as it returns to profit

New long-term project will see owner add around 30 vessels as it focuses on chemical tankers.

Oslo-listed Odfjell is launching a new drive to expand its fleet as it focuses on chemical tankers.

The company said the Odfjell Compass project has a long-term aim of operating 100 vessels, up from 72 as of summer 2016.

The owner said the scheme represents "a clear strategic plan which guides us in how we conduct our business, and in the choices we need to make going forward." 

The mission statement is safety and efficiency, with chemical tankers and tank terminals as its core business.

It is aiming for average long-term top-line revenue growth of 10% per year and an industry-leading EBITDA margin.

Clarksons lists it with 48 owned ships, plus four tankers on order in China. It still has four LPG carriers on order in China too, but is likely to cancel these, as it has four others in the series.

"Our markets remained challenging, but Odfjell continues to build both financial and operational strength. Based on our strengthened position we are now launching our new strategy - the Odfjell Compass - which will be leading the company into the future", said CEO Kristian Morch.

Back in black

The company also said it returned to profit in the fourth quarter, driven by booming earnings for tank terminals, but its gas carriers lost money.

The net figure in the final three months was $43m, from a loss of $18m in 2015.

Revenue dipped to $238m from $253m, but it said efficiency programmes continue to increase competitiveness, and the balance sheet has been substantially strengthened.

Its tank terminals produced profit of $37m from a loss $4m in 2015, while tankers contributed $11m against a loss of $9m last year.

The LPG ships logged a loss of $6m, compared to break-even 12 months ago.

Annual earnings hit $100m, compared with a deficit of $36m in 2015.

It said the result was weaker than in the third quarter, as it expected.

"The main driver for the weaker results was a decrease in contract nominations and increased voyage expenses mainly due to an increase in fuel prices," it added.

"The reduced contract nominations were mitigated by a significant increase in spot volumes. However, these volumes were at lower rates, which reflected market sentiment during the quarter."

Average bunker prices rose to $310 per tonne in the fourth quarter, up from $275 per tonne in the previous quarter.

Looking ahead, it said it expects that first quarter time-charter results will be in line with or marginally better than the fourth quarter.

"In a longer perspective we believe the market is fairly balanced, but rates are expected to be under pressure in 2017 as the market absorbs new capacity," it added.

Below expectations

Norne Research said revenues were "spot on" its expectations, but increased costs brought margins down to levels not seen since the first quarter of 2015.

One-off boosts from the sale of an Oman terminal and other financial gains inflated the bottom line, but adjusted earnings per share came in "significantly lower than projected" at $0.03, against Norne's prediction of $0.13.

"Our estimates are likely to be lowered after a weaker report and we will review our recommendation," it added.