Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Odfjell SE (STU:O7F, Financial) delivered the second-best quarterly result in its history with a net result of USD71 million.
- The company achieved a 7% increase in contract rates, marking the 14th consecutive quarter of rate increases.
- Odfjell SE maintained a strong safety performance with no significant incidents reported during the quarter.
- The company successfully took delivery of a new vessel on long-term time charter, expanding its fleet.
- Odfjell Terminals maintained a high occupancy rate of 95% and stable financial performance.
Negative Points
- Time-charter earnings decreased to USD212 million, down from USD215 million in the previous quarter.
- Operating expenses increased by USD2.7 million, reaching USD53.7 million, due to the absence of positive one-offs from the previous quarter.
- The spot market showed signs of weakening, impacting the company's earnings outlook for the fourth quarter.
- The company's carbon intensity, AER, increased slightly to 7.2 due to seasonal effects.
- Geopolitical tensions and macroeconomic uncertainties, particularly in China and Europe, pose risks to market stability.
Q & A Highlights
Q: Could you mention the exact elements you include in your cash break-even? Do you include ship depreciation?
A: We include all running expenses in the Group, such as OpEx and G&A, as well as interest and installments, and running investments on the vessels. Depreciation is not included, but interest and installments are. Our goal is to keep cash break-even below timecharter earnings to ensure positive cash flow to our owners.
Q: Do you plan to exercise purchase options on more ships?
A: We are continuously evaluating purchase options on our vessels, both on timecharter and bareboats. These options are assessed based on their favorability compared to market prices. We will likely continue to exercise these options going forward.
Q: What impact might Donald Trump becoming the next US president have on your market?
A: If Trump becomes president, we might see more protectionism, which could affect US exports. He may also reverse some initiatives in the Inflation Reduction Act, potentially impacting global markets. Overall, there could be a slight reduction in US activities if protectionist measures are implemented.
Q: Can you give more color on how important swing tonnage has been for the recent reduction in rates?
A: Swing tonnage focuses on easy chemicals, which indirectly affects our market by causing less advanced chemical tankers to move into our core markets. This domino effect can lead to increased competition in our segment, impacting rates.
Q: How should we think about the Q4 guidance of earnings below Q3 compared with the last quarter's guidance of Q3 somewhat below Q2?
A: We are in a strong market, but the spot market is somewhat depressed. Our guidance reflects this, with about 40% exposure to the spot market. Despite this, we are not concerned as we are still in one of the strongest markets seen in over a decade.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
