Stolt-Nielsen improves profitability

COST CONSCIOUS

RESULTS • THE COVID-19 PANDEMIC HAS FOCUSED MINDS ON THE BOTTOM LINE. STOLT-NIELSEN SHOWS HOW ITS DIVERSE PORTFOLIO IS SHORING UP PROFITS, DESPITE LOWER REVENUES

STOLT-NIELSEN LTD HAS reported strong figures in its results for its third quarter, ending 31 August. Compared to the second period, EBITDA rose from $123.1m to $143.5m, with net profit up from $12.3m to $30.5m. The improvement reflects healthy volumes, lower fuel costs and overall lower administrative expenses.

Niels G Stolt-Nielsen, CEO, says: “During the third quarter all of our divisions generated improved results in the face of continued challenges brought on by the Covid pandemic. While the global economic outlook remains uncertain, we are cautiously optimistic about the fourth quarter and beyond, based on the contract portfolio we have secured across our three logistics businesses.”

Those improvements in profitability came despite a fall in revenues, from $503.5m in the second quarter to $474.0m, and were also well up on the third quarter 2019, when revenues were $517.8m but net profit only $4.3m.

LOWER COSTS IN MANY AREAS, TOGETHER WITH

A FOCUS ON EFFICIENCY, HELPED STOLT-NIELSEN

As many companies have done over the past six months, Stolt-Nielsen has been focusing on conserving cash and keeping its workforce safe. “At the beginning of the pandemic we took early and decisive action to reduce costs and preserve cash, and at the end of the third quarter we had approximately $500m in available liquidity,” says Niels Stolt-Nielsen. “We continue to focus on safe and reliable operations that deliver quality services and products to our customers, while protecting our revenue base.”

That focus on cash has, though, not prevented the company from making opportunistic investments. “During the quarter we were able to secure five modern 26,000-dwt stainless steel chemical tankers in the second-hand market at a very attractive price, a deal made possible by our resilient business model and financial strength,” says Niels Stolt-Nielsen. The ships are expected to be delivered starting December 2020.

REVENUES DOWN, PROFITS UP Stolt Tankers posted a third-quarter operating profit of $28.1m, up from $20.0m in the previous period and $15.0m in third quarter 2019, despite a drop in revenues arising from fewer operating days as a result of drydocking schedules and Covid-related delays. Freight rates were also slightly down as it carried more lower paying cargoes; the intra-European market was also weak. On the other hand, bunker prices were well down.

“Stolt Tankers’ continuing focus on efficiency initiatives is starting to have a positive impact,” says Niels Stolt-Nielsen. “However, the Covid pandemic continues to impact scheduling, necessitating costly rerouting of ships in order to make overdue crew changes.”

Stolthaven Terminals recorded third quarter operating profit of $22.7m, up from $19.2m in the previous period, against flat revenues and a slight decline in overall utilisation. StoltNielsen notes that the joint venture terminal in China posted improved results on the back of local market strength.

“Results at Stolthaven Terminals continued to improve, as demand for chemicals used for packaging and healthcare products remained strong, offsetting weak demand for those bound for the automotive and construction sectors,” Niels Stolt-Nielsen notes.

At Stolt Tank Containers, August brought an increase in shipments following June and July’s seasonal summer slowdown, with the quarter’s revenues well off the previous quarter, as anticipated. Operating profit, however, once again improved, reaching $17.5m compared to $13.0m in the second quarter and $12.1m in the same period 2019. The drop in revenue was more than offset by lower ocean freight and trucking expenses, largely due to lower fuel costs, and repositioning costs for empty tanks also fell.

Looking ahead, Niels Stolt-Nielsen says: “We are cautiously optimistic that the momentum of a strengthening chemical tanker market will continue. Longer term, the favourable supply/demand outlook should provide a good foundation for continued improved results at Stolt Tankers. At Stolthaven, we expect to see healthy demand in most regions. Following the seasonally slow third quarter at Stolt Tank Containers, we are seeing signs of improvement, particularly in Asia.

“Our diverse portfolio of businesses, dedicated employees and forward-looking strategy mean that we are well positioned for what may come.” www.stolt-nielsen.com