Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dampskibsselskabet Norden AS (DPBSF, Financial) reported a net profit of $25 million for the quarter, with a return on invested capital of 15% over the last 12 months.
- The company successfully sold five vessels, generating expected future gains of $25 million.
- Dampskibsselskabet Norden AS (DPBSF) has a strong asset portfolio with significant purchase options, positioning it well for a structurally positive asset market.
- The company has reduced its emissions by 14% compared to 2022, demonstrating a commitment to sustainability.
- Despite market volatility, the company has delivered a 23% return on invested capital per year over the last five years.
Negative Points
- The freight services and trading unit reported a net loss of $18 million, impacted by a significant decline in tanker spot market rates.
- The company's full-year profit guidance has been narrowed to $160 million to $200 million, down from a previous range of $160 million to $240 million, due to weaker tanker market conditions.
- Total shareholder returns have been negative by 22% in the past 12 months.
- The company faces short-term headwinds in the dry cargo market due to Chinese economic uncertainty.
- The product tanker spot rates have been soft, and the expected rebound may not impact earnings until the first quarter of 2025.
Q & A Highlights
Q: What makes you confident that product tanker spot rates will rebound after being soft in Q3 and Q4?
A: Jan Rindbo, CEO, explained that the main change was crude tankers switching to clean cargos, impacting the product tanker market. This switch is reversing, and seasonal demand typically increases in winter, leading to expected rate improvements.
Q: How do you reconcile expected declines in freight service and trading margins with anticipated increases in product tanker rates?
A: Jan Rindbo, CEO, noted it's a timing issue. The decline in Q3 rates affects Q4 earnings due to a lag, with improvements expected to impact Q1 2025 more significantly.
Q: How are you mitigating the negative delta between spot and time charter rates in the freight service and trading division?
A: Jan Rindbo, CEO, mentioned strategies like timing charters, taking cover by chartering ships out on higher-paying contracts, and using freight forward derivatives to manage the negative delta.
Q: Can you clarify the impact of vessel sales and sublease gains on your updated guidance?
A: Martin Badsted, CFO, confirmed that vessel sales and sublease gains are part of their business model, contributing to the guidance. These gains are not one-offs but part of their strategy to capitalize on vessel value increases.
Q: What is the impact of selling five vessels on your operations and earnings?
A: Martin Badsted, CFO, confirmed that two vessels were sold through declared purchase options, and three were from the owned fleet. While operating earnings are lost, these sales are part of their strategy to realize gains from vessel value increases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
