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SECOND OF PLEASURE RESULTS • A GOOD SECOND QUARTER REFLECTS ODFJELL’S ABILITY TO ADAPT ITS CHEMICAL TANKER FLEET TO MEET WHAT HAVE BEEN RAPID AND EXTENSIVE CHANGES IN DEMAND PATTERNS ODFJELL SE HAS reported very strong financial figures for the second quarter 2020, on the back of a sharp upturn in freight rates in the chemical tanker sector. Strong earnings in the clean petroleum product (CPP) and vegoil sectors pulled swing tonnage out of the chemical trades, supporting a tightening market. Group EBITDA rose from $66.3m in the first quarter to $81.9m, a figure 44 per cent up on second quarter 2019, despite a slight slip in revenues from $259.3m in the first quarter to $252.4m. Odfjell delivered quarterly net profits of $30.9m, its first quarter in the black for
improvement posted in the period came from its chemical tanker operations, with the smaller storage terminal operation continuing its stable trajectory. “We are happy to report positive figures in light of the unprecedented times of the global economy,” Mørch says. “This shows the agility and resilience of our global platform and business model. Covid-19 continues to cast high uncertainty about the future, but we are so far not experiencing any major negative impact overall on our market.” However, while the health crisis has so far had little impact on Odfjell Tankers, the group
some time and a significant improvement on the loss of $10.2m recorded in the same period last year. Kristian Mørch, CEO of Odfjell, says the second quarter was good for Odfjell due to a continued firming chemical tanker market and a rising spot market. All the financial
expects the usual seasonal downturn in the third quarter, although it still expects to make a profit.
HCB MONTHLY | OCTOBER 2020
RATES AND EARNINGS Odfjell reports that contracts of affreightment (COAs) were being renewed at rates on
average some 6 per cent higher, although its COA coverage dropped during the second quarter. This was no bad news, though, as it allowed the company to take advantage of a strong spot market, responding to regional variations in the impact of Covid-19. Odfjell also positioned its fleet opportunistically to match those variations. Furthermore, COA coverage increased towards the end of the quarter and into the third quarter, although Odfjell is firm that it will not renew COAs at unsustainable levels. Profitability has also been helped by ongoing cost-reduction measures. Odfjell notes that it has reduced breakeven costs from $27,279 per day in 2012 to $20,226 per day in the first half of 2020, though this is expected to increase in the second half due to some scheduled drydockings. The projected breakeven figure for 2021 as a whole is $21,400 per day. As a comparison, during the second quarter, timecharter equivalent earnings (TCE), net of pool distribution, came in at $22,186 per day. The second quarter also benefitted from lower bunker fuel costs, with Odfjell saying that the market has stabilised following the ‘IMO 2020’ transition and that price spreads have been relatively stable. As an indication, bunker costs after hedging and adjustment clauses totalled $35.6m in the second quarter, down from $50.1m in the prior period and also below the level seen through 2019.
