Ardmore’s latest investment will allow its chemical tankers to carry a wider range of cargoes

Ardmore Shipping’s latest investment is not an expansion of its fleet, but rather an expansion of what its vessels can carry.

Executives for the New York-listed shipowner told analysts it is investing in upgrading tank coatings for its six owned chemical tankers.

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Chief executive Gernot Ruppelt said the upgrades will “further expand revenue opportunities by increasing cargo flexibility” for the vessels.

The company has upgraded coatings on four of its chemical tankers, and two more will be completed this quarter.

“This aligns with Ardmore’s trading strategy,” Ruppelt said. “It offers the flexibility to move deeper into the premium end of the cargo slate, boosting earnings accordingly.”

Bart Kelleher, the company’s president and chief financial officer, said the project will make up $15m of Ardmore’s $35m in forecast capital expenditure this year.

It is expected to have a return of 20%, he said.

The Ireland-headquartered company made the investment as it allocated less capital to shareholders, delivering a dividend of just $0.05 per share, down from $0.08 in the prior quarter and the lowest level since the shipowner resumed the payouts in early 2023.

Payout policy

The dividend cut would have come as no surprise to savvy investors. Ardmore has a policy of paying one-third of adjusted earnings to shareholders, and those earnings came down as expected in the first quarter.

The company’s six chemical tankers earned a time-charter equivalent rate of just under $15,000 per day.

With 60% of second-quarter days locked in, that has risen to $19,500 per day so far for the next reporting period. The vessels range in size from 25,000 to 37,800 dwt.