Stolt Tankers remains optimistic

READY FOR RECOVERY

RESULTS • STOLT-NIELSEN ENDED THE YEAR WITH A MIXED BAG OF FINANCIALS BUT IS OPTIMISTIC THAT UNDERLYING SUPPLY/ DEMAND FACTORS WILL SEE IT THROUGH 2021 IN COMFORT

STOLT-NIELSEN LTD has reported revenues of $1.96bn for the year to end November 2020, slightly down on the $2.03bn recorded in 2019, though operating profit rose from $181.9m to $189.9m and net profit was up 33 per cent at $25.4m. The company’s fourth quarter also showed some improvement in profitability despite a 3 per cent slide in revenues compared to the year earlier figure.

Stolt Tankers, the group’s largest division, saw a slight decline in revenues for the year, coming in at $1.11bn as against $1.15bn in 2019, though operating profit rose by 49 per cent to $84.6m. Fourth quarter operating profit was $31.9m, up from $28.1m in the third quarter and more than double the $14.6m posted for the fourth quarter 2019.

Commenting on the results from Stolt Tankers, Niels G Stolt-Nielsen, CEO of Stolt-Nielsen Ltd, says: “As expected, following a relatively strong third quarter, the fourth quarter saw an easing in tanker volumes. However, Stolt Tankers’ results for the quarter improved, driven by lower ship management costs, as crew changes have become easier in recent months.”

The fourth quarter 2020 saw lower revenues from deepsea operations, down by 5.8 per cent, but there was a strong increase in freight revenues from Stolt’s regional fleets in Europe and the Caribbean. The spot market was generally weaker but contract renewals were done at levels on average 6.1 per cent higher.

INTO THE NEW YEAR Since the end of its 2020 financial year, Stolt Tankers has experienced “challenging” conditions, as is normal for the time of year. “Our fiscal first quarter tends to be seasonally slower, as the Christmas and Chinese New Year holiday season and weather-related delays impact results,” Stolt-Nielsen says. However, he adds that the favourable supply/ demand outlook should provide “a good foundation for continued improvements in the medium to long term”.

Since the end of November, Stolt Tankers has begun taking delivery of the five 26,000dwt chemical tankers acquired from Chemical Transportation Group (CTG) in August 2020, two of which will join the NYK Stolt Tankers joint venture. Stolt Bismuth arrived at the start of January and the remaining four ships are expected to join the Stolt fleet over the next few months.

The E&S Tankers joint venture commenced operations at the start of this year, following the announcement in early November 2020 that Stolt Tankers BV and the John T Essberger Group were to merge their regional parcel tanker fleets trading within Europe. E&S Tankers has 48 parcel tankers in its fleet, ranging in size from 2,800 dwt to 11,300 dwt, concentrating on the Baltic, Mediterranean and north-west Europe markets.

TERMINAL ACTIVITY Stolthaven Terminals, Stolt-Nielsen’s bulk liquids storage division, recorded operating revenue of $238.5m for the year to end November 2020, slightly down on the $250.8m recorded in the 2019 financial year. Operating profit for the year was virtually flat at $68.8m. The fourth quarter was affected by a $12.4m impairment of goodwill recognised at its Australian terminals but the underlying operating profit was also off by $5.9m as a result of higher insurance costs and lower operating income in Singapore and Australia.

Across its network, average tank capacity utilisation slipped from 93.7 per cent in the third quarter to 90.5 per cent, though this is ahead of the fourth quarter 2019’s figure of 89.4 per cent.

“Overall we continue to see steady demand,” says Niels G Stolt-Nielsen, with the promise of similar conditions in most regions during 2021.

TIGHT IN TANKS Stolt Tank Containers achieved operating revenues of $520.6m for the year to end November 2020, slightly down on the $528.6m recorded for the previous year. Operating profit fell from $56.1m in 2019 to $51.2m, with fourth quarter operating profit of $13.9m some 20 per cent below the third quarter figure and also 11.5 per cent below the fourth quarter 2019.

Transportation revenues increased by 9 per cent in the fourth quarter, recovering from a 10 per cent drop in the seasonally weak third quarter, with utilisation rising from 65.4 per cent to 67.7 per cent. However, demurrage revenue declined by $3.9m as customers began returning tanks faster. In addition, tightness in the ocean freight business led to higher costs and trucking expenses were also higher. Other move-related expenses such as repositioning and cleaning costs saw a substantial increase because of the product mix and a need to reposition tanks to load areas.

“Stolt Tank Containers continues to see strong booking levels, but tight ocean carrier and trucking capacity and cancelled sailings are making it increasingly costly and time consuming to move our tanks,” says Niels G Stolt-Nielsen.

LOOKING AHEAD As with all other participants in the logistics sector, Stolt-Nielsen’s immediate outlook is clouded by the ongoing Covid-19 pandemic and its effects on consumer behaviour and trade flows. This is of particular concern in the group’s fish farm business, Stolt Sea Farm, which had just been recovering from earlier lockdowns and restrictions affecting the hospitality industry and therefore sales of its output.

“With the resurgence of the pandemic, the global economic outlook remains uncertain and therefore makes it difficult to predict the economic performance of our businesses for 2021,” says Niels G Stolt-Nielsen. “However, with the contract portfolio we have secured across our three logistics businesses we have limited any downside from the pandemic. With the current focus on the roll-out of Covid vaccines we remain optimistic about the medium to long-term outlook, but in the short-term we expect volatility and uncertainty to remain.

“Stolt Sea Farm was able to build on the price recovery that began in the third quarter and during the fourth quarter successfully completed the sale of its caviar business. We also decided to explore a potential IPO of Stolt Sea Farm which we hope will make the underlying value in our company more transparent.

“As much uncertainty remains around the timing of the roll-out of the Covid vaccines we continue to preserve cash, while maintaining our focus on safe and reliable operations that deliver quality services and products to our customers. Our diverse portfolio of businesses, dedicated employees and forward-looking strategy mean that we are well positioned for what may come,” Stolt-Nielsen concludes. www.stolt-nielsen.com

STOLT TANKERS IS LOOKING AHEAD TO ANOTHER DECENT

YEAR, WITH STRONG FUNDAMENTALS AND CONTINUED

SUPPLY-SIDE RESTRAINT, THOUGH ITS PARENT

WILL FOCUS ON PRESERVING CASH AND DELIVERING