Nordic Tankers: 2Q "Slightly Improved"
The second quarter of 2011 saw slightly improved time charter equivalent (TCE) revenue resulting in improved results compared to the first quarter 2011, and led to an impoved H1 2011 EBITDA compared with H1 2010. EBITDA in Q2 2011 was $4.8 million, up from $1.5 million in Q1 2011, and cash flow was a positive USD 4.3 million compared to a negative cash flow in Q1 2011 of USD 6.1 million, Nordic Tankers reported for the first half of 2011.
In H1 2011 Nordic Tankers’ TCE revenue increased by $20.4 million compared to H1 2010 to $51.2 million ($30.8 million). EBITDA was $6.3 million in H1 2011 ($1.9 million) and the result before tax was a loss of $5.9 million ($-12.0 million). The net result includes an unrealized currency loss of $3.5 million as well as an upwards revaluation of $5.2 million, which was made in Q1 2011 and is related to the acquisition of the remaining vessels from Zacchello Group.
The improvement in gross revenue seen during Q1 continued into Q2 for both the chemical and product tanker segments and bunker prices came off the highs seen in Q1. Whereas April and May were both relatively good months, the market slowed somewhat in June in a sign of a typical summer market. The H1 2011 results are unsatisfactory, yet improved compared to H1 2010 and in line with expectations. The supply/demand balance is expected to gradually improve during H2 2011 and Management expects this to influence freight rates positively, although current global economic turmoil may somewhat postpone such development.
Cash flow was $-1.8 million in H1, primarily caused by interest and debt repayments as well as increases in working capital. The comparable figure for H1 2010 was an increase of $25.5 million mainly as a result of the cash generated from the transaction with Clipper Group in January 2010 and the rights issue in May 2010. Net cash flow was $–6.1 million in Q1 2011, however, the increase in freight rates as well as improvements in working capital resulted in a positive net cash flow of $4.3 million in Q2 2011. Therefore, expectations for 2011 cash flow of between $0 and $-10 million are maintained.
Expectations for 2011 TCE revenue of $95-105 million, EBITDA of $10-20 million, and a loss before tax, revaluations, write downs and exchange rate effects of $15-25 million are maintained.
Nordic Tankers further strengthened the cooperation with Singapore based Womar Holdings Pte. Ltd., by forming a joint venture company ‘Nordic Womar Pte. Ltd.’. The joint venture manages two pools with about 30 10,000-25,000 dwt coated chemical tankers and began operations 1 March 2011.
Nordic Tankers also acquired full ownership of five handy size product tankers previously owned jointly with Zacchello Group, as well as the remaining shares in 4 stainless steel chemical tankers acquired in the transaction with Clipper Group in 2010. Through these transactions Nordic Tankers has taken over the remaining minority shares in all of the Company’s vessels and Nordic Tankers now fully owns 15 vessels. Both of these transactions are positive developments in line with Nordic Tankers’ growth ambition.
In Q1 2011 Nordic Tankers completed the capital decrease authorised by a General Meeting on 5 November 2010 from a total share capital of DKK 377,648,880 nominal value to DKK 37,764,888 nominal value, and in Q2 2011 Nordic Tankers established a new warrant program for the Company’s management and employees in accordance with the authority given on the 29 April 2011 General Meeting. 1,245,000 warrants were issued of which 550,000 warrants were granted to Management.
“The month-to-month trend has been positive during H1 2011 and our EBITDA level reflects a good improvement both vis-vis the same period last year and when comparing Q2 2011 with Q1 2011, although freight markets remained at very low levels. We remain confident that careful execution of our strategy will enable Nordic Tankers to take advantage of the excpected market recovery, even though the current global economic challenges may somewhat postpone or diminish such recovery” says CEO Tommy Thomsen.