Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dampskibsselskabet Norden AS (DPBSF, Financial) achieved a net profit of $46 million in Q2, aligning with expectations and reflecting a 21% return on invested capital over the last 12 months.
- The company has a strong position in the structurally positive asset market, with a low order book, limited shipyard capacity, and an aging global fleet.
- Investments in own vessels and a portfolio of purchase options provide significant value upside.
- The acquisition of Norlat Shipping is expected to contribute high-quality earnings, supporting strategic growth ambitions in freight services and trading.
- Dampskibsselskabet Norden AS (DPBSF) has achieved a 15% reduction in emissions from a 2022 baseline, demonstrating strong progress in sustainability efforts.
Negative Points
- The freight services and trading (FST) segment reported a net loss of $18 million due to higher charter costs related to cargo commitments.
- Current market conditions are described as an 'owner's market,' with high asset prices and charter costs, making it challenging to achieve strong margins.
- There is a moderate positive outlook for dry cargo, with concerns about demand being front-loaded into China, potentially affecting future quarters.
- The tanker market is experiencing some weakness, attributed to seasonality and the switching of crude tankers into product transportation, impacting demand.
- Shareholder returns have been slightly down over the last 12 months, despite strong long-term returns, indicating short-term challenges.
Q & A Highlights
Q: Can you expand on the performance in the freight service and trading segment and your expectations for the second half of the year?
A: Jan Rindbo, CEO: We expect a gradual improvement in the second half of 2024, aiming for break-even by the fourth quarter. Medium-term, we anticipate returning to profitability in 2025, targeting $500 per day in earnings, despite current market challenges.
Q: What market dynamics are necessary for the freight service and trading segment to achieve $500 per day earnings?
A: Jan Rindbo, CEO: We need to focus on shorter-term charters and trip charters to reduce exposure to market volatility. This approach allows us to leverage our expertise without relying heavily on long-term market predictions.
Q: Have you assumed any income from subleases in the second half of the year in your guidance?
A: Martin Badsted, CFO: No, our guidance does not include potential sublease gains. We only account for confirmed contracts and values in our estimates.
Q: The table shows declining chartered vessel days from 2024 to 2026. Will these numbers increase as time goes by?
A: Martin Badsted, CFO: The current table reflects contractually secured days. We expect the 2026 numbers to rise if we find attractive chartering opportunities, but these are not included until contracts are finalized.
Q: What are your expectations for the freight services and trading segment in the short term?
A: Jan Rindbo, CEO: We expect earnings and margins to gradually improve from the second quarter levels throughout the rest of the year, with stable high-level earnings in assets and logistics driven by high coverage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
