"Year of continued improvements" J. Lauritzen publishes financial report for 2018
Financial report for 2018
Year of continued improvements
“2018 was a year with overall good progress where we improved our financial as well as our operational performance and enjoyed overall market improvements”, says CEO Mads P. Zacho, adding that “despite considerable result improvements there is still some way to go before we are back where we want to be in financial terms.”
Main initiatives and events
- Additional handysize bulk carriers were taken on time charter of varying length at market levels with options to extend as well as to purchase.
- One handysize bulk carrier was sold and three loss-making long-term time-chartered supramax and two handysize bulk carriers were redelivered to their owners as commitments expired.
- Four 6,000 cbm gas carriers were sold with bareboat charter back and one gas carrier was taken on a medium-term time charter with options to extend.
- Bareboat charter periods were extended for four 3,200 cbm gas carriers.
- Five gas carriers were reflagged to the Danish International Register of Shipping (DIS) and became the first J. Lauritzen-owned gas carriers under Danish flag since 2003.
The recovery of dry bulk spot markets continued into 2018, although at a slower rate than in 2017. In the gas carrier markets, strong supply growth in 2017 together with a decline in demand was rebalanced in 2018 by rising seaborne demand, mainly in petrochemical gases, together with a steep decline in fleet growth.
During 2018, we controlled an average fleet of 109 vessels compared to 118 vessels in 2017.
In Q4, operating income before depreciation (EBITDA) and special items amounted to USDm 0.6, up USDm 8.3 on same period in 2017.
Full-year operating income before depreciation (EBITDA) and special items amounted to USDm (6.3), up USDm 24.7 on 2017. The result was within the range of our expectations.
Assets and liabilities
Total assets amounted to USDm 462 compared to USDm 504 at year-end 2017. Solvency ratio was 51%, compared 52% at year-end 2017.
Outlook for 2019
Despite the disappointing start of 2019 for dry bulk markets with sharp freight rate declines, our expectation for 2019 is that dry bulk rates overall will strengthen based on improving market fundamentals Overall gas carrier markets are expected to further improve in 2019.
Our result for 2019 is expected to be lower than in 2018. A positive impact on the result from the expected moderate improvements of the dry bulk and gas carrier markets will be offset by special items of USDm 25 in 2018, which are not expected to be repeated in 2019.
Furthermore, the adoption of the IFRS 16 accounting standard on leases as of 1 January 2019 will have a negative impact on our result.
After year-end events
One 5,900 cbm gas carrier was sold with delivery to the new owner in January 2019.
An agreement was reached with Teekay LNG Partners L.P. (Teekay LNG), which implies that seven modern ethylene gas carriers, owned by Teekay LNG, will join Lauritzen Kosan’s pool of ethylene carriers with effect from 1 March 2019.
Mads P. Zacho, CEO, phone + 45 33 96 82 00 or + 45 61 55 50 80