Odfjell Reports Weak Q4 2012 Chemical Tankship Market

Tankship & terminal storage owners/operators Odfjell also noted significant losses at their Rotterdam terminal in its Q4 2012 report.

Jan A. Hammer, President/CEO Odfjell SE comments on the financial report as follows:

The chemical tanker market improved seasonally towards the end of the year. Volumes shipped remained on par with the previous quarter. Earnings on a time-charter basis were up 7.8% compared to third quarter. Freight rates per tonne shipped increased by about 10%. The average price on bunkers purchased in the quarter remained high.

In fourth quarter, with the exception of Odfjell Terminals (Rotterdam) (OTR), the EBITDA for our tank terminals remained on par compared with previous quarter. In December we announced that we had signed of a Letter of Intent with Lindsay Goldberg LLC to expand the existing joint venture to essentially include all of our tank terminal business. The proposed transaction will significantly increase the capitalization of the tank terminal division and will enable us to jointly embark on an ambitious and accelerated growth strategy.

OTR has reached agreements in principle with the Unions and the Works Council with the objective of finalizing the negotiations regarding downsizing and reorganisation of the work force.

The re-commissioning project at OTR is slightly delayed relative to earlier plans. 717,000 cbm is approved for usage per end of January 2013. We now expect 1.2 million cbm to be available for commercial use by end of Q2 2013.

The supply/demand picture within the chemical tanker segment continues to move in our favour. However, favourable yard prices and modern fuel efficient designs may lure investors to contract new tonnage. The supply overhang, on the other hand, may be prolonged due to reversal of lost capacity through slow-steaming and low utilisation.

Our main concerns relate to challenging markets also in 2013, high fuel costs and potential setbacks in the global economy. On the tank terminal side we have witnessed higher activities and inquiries for storage. We expect improved earnings in our tank terminal division in the first quarter of 2013.