Stolt Tankers enjoys recovery

CASH BACK REWARDS

MARKET • STOLT TANKERS DID VERY WELL IN THE SECOND QUARTER THOUGH GLOBAL VOLATILITY AND GEOPOLITICAL UNCERTAINTIES MAKE IT HARD TO PLAN FOR GROWTH GOING FORWARD

STOLT TANKERS’ SECOND-QUARTER financial results, covering the three months to end May, illustrate the extent to which the chemical tanker market has continued its improvement, with rates firming on the back of strong demand and tight supply after swing tonnage moved out of the market and few newbuildings are being added.

Operating revenues for the three months totalled $365.4m, 27 per cent up on the $287.0m recorded a year earlier. Operating profit increased from $12.6m to $40.8m. The six-month figures show a 24 per cent rise in revenues to $679.9m and a 257 per cent increase in operating profit at $65.8m.

In the deepsea trades, cargo volumes were up by 7.2 per cent year-on-year and, along with an increase in operating days and higher bunker surcharge revenue, resulted in a $117.9m increase in revenues. In the regional trades, revenues rose by $14.2m year-on-year due to additional capacity entered into the Caribbean trade and strong regional markets in Asia.

Commenting on the figures, Niels G Stolt-Nielsen, CEO of parent company Stolt-Nielsen Ltd, says: “The second quarter continued where the first quarter ended with growing demand and a shrinking orderbook for new ships, with the positive momentum continuing to build in the chemical tanker market. Our tanker trading team is standing firm on contract renewals and spot fixtures to capitalise on the tightening market, and we are moving in the right direction.

“However, considering the historically low freight levels and weak returns that the chemical tanker industry has seen for many years now, we still have a long way to go until our returns through the cycle are sufficient to attract long-term capital for further investments in newbuildings,” StoltNielsen adds.

Group operating profit for the first half of the financial year came in at $1.3bn, compared to $1.0bn last year, with the second quarter recording the company’s highest net profit since 2007.

LOOKING GOOD For the next 12 to 18 months, Stolt Tankers expects a continued steady recovery of the chemical tanker markets, building on the economic recovery during 2021 that followed the worldwide economic downturn caused by Covid-19. Although there are concerns around the macroeconomic impact of rising interest rates on the back of rapidly rising inflation, the outlook remains optimistic for the chemical tanker segment due to a favourable supply/ demand balance, as demand for chemical tankers continues to grow while the orderbook for new ships remains at an all-time low with limited yard capacity available in the near to medium future.

“I expect our positive momentum to carry through the rest of the year. Stolt Tankers should continue to see rising freight rates that will outpace the rise in fuel costs,” Niels G Stolt-Nielsen says. “Although we are starting to enjoy improving returns on our investments, we cannot ignore the many external challenges that lie ahead. The war in Ukraine is increasingly impacting energy supplies, particularly in Europe. Excess liquidity in the private sector following many years of quantitative easing, together with postpandemic demand, has driven up inflation, which is now being amplified by rapidly rising oil and gas prices.

“To curb inflation central banks are raising interest rates, which, if taken too far, will inevitably lead to a global recession,” StoltNielsen adds. “We are monitoring the potential impact these factors could have on our businesses. We remain cautious when making new investments, ensuring that the return hurdles account for higher inflation and funding costs in the future, and we are maintaining our focus on debt reduction to strengthen the balance sheet.” www.stolt-nielsen.com