Since 2016, the weakening market has continued to impact the tanker industry. TCE revenue fell to USD 18.0 million (USD 22.0 million) for the 9 months ended 30 September 2017 (“9M 2017”). As a result, the Group incurred a loss after tax of USD 2.2 million in 9M 2017 compared to a profit of USD 1.4 million in the same period last year (or a loss after tax of USD 3.7 million after accounting for a one-off impairment loss of USD 5.1 million). No impairment loss was recognised in the period under review.
The reduction in profit of USD 3.6 million was mainly attributable to the lower tanker Time Charter Equivalent (“TCE”) revenue from the vessels deployed in the two pools. The loss of earnings arising from the dry-docking of Nordic Hanne in June 2017 also contributed to the decrease.
Expenses relating to the operation of vessels in 9M 2017 was marginally lower at USD 11.1 million (USD 11.4 million) compared to the same period last year.
EBITDA fell to USD 5.4 million (USD 9.2 million) primarily due to the reduction in TCE revenue in 9M 2017.
The Group did not make any impairment nor reversal of impairment during the 9M 2017 (impairment loss of USD 5.1 million in 9M 2016). But development is monitored closely due to market uncertainties.
After accounting for depreciation, interest expenses and other finance expenses, the loss after tax in 9M 2017 was USD 2.2 million (loss after tax of USD 3.7 million).
Under the loan agreement, cash in excess of USD 6.0 million will be used to pay down the loan facility. As the cash balance did not exceed USD 6.0 million, there was no cash sweep for the period under review. For the same period last year, there was a cash sweep of USD 2.7 million.
Between 30 September 2016 to 30 September 2017, equity decreased from USD 40.5 million to USD 37.2 million as a result of the cumulative loss during the period. Consequently, the equity ratio decreased marginally from 32.9% to 32.3% between 30 September 2016 to 30 September 2017.
During the financial period, cash flow generated from operations was USD 3.2 million (USD 6.0 million) mainly from earnings by the two pools and time-charter income received for Nordic Anne, offset by payment of periodic interest expenses on the term loan. During the financial period, the Group invested USD 1.2 million (USD 0.1 million) in dry-docking. The Group made a partial repayment of USD 3.5 million (USD 6.5 million, including a USD 2.7 million cash sweep) on the term loan facility.
Cash and cash equivalents stood at USD 3.5 million (USD 6.0 million), a reduction of USD 2.5 million from 30 September 2016. The reduction was due to lower TCE earnings during the period.
Operationally, the 5 handysize vessels are expected to remain commercially deployed in the UPT Handy Pool (three vessels) and Hafnia Handy Pool (two vessels), respectively. The LR1 tanker (Nordic Anne) which was redelivered upon the completion of the 3-year time charter in October 2017, re-entered the Straits Tankers Pool.
Given the current soft sentiments on the tankers’ market, the Board has revised downwards the outlook for 2017 against the guidance indicated in the Interim Report H1 2017. The EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to be in the range of USD 5.0 million – USD 8.0 million, a reduction from USD 6.0 million – USD 9.0 million. The result before tax is expected to be between USD -4.5 million – USD -2.5 million, decreased from USD -3.5 million – USD -1.5 million. This revised outlook for 2017 does not take into account any impairment of vessels’ carrying values.
The Board will look at growth and consolidation opportunities that are accretive to the Company.
Nordic Shipholding A/S
