Company Announcement: 14/2014

Q3 Result 2014


November 26, 2014

NORDIC SHIPHOLDING A/S
Company Announcement: 14/2014
 

Published via NASDAQ OMX on November 26, 2014

Q3 Result 2014

Summary

 

The comparison figures for first 3 quarters 2013 are stated in parenthesis.

This Q3 report covers the period 1 January 2014 to 30 September 2014.

For the 9 months ended 30 September 2014, the Group made a loss before tax of USD 4.6 million compared to a larger loss of USD 6.3 million in the same period last year.  The smaller loss was due mainly to lower interest expenses of USD 2.6 million (USD 5.4 million).

TCE earnings rose marginally by 1.0% to USD 18.9 million (USD 18.7 million) in the first 3 quarters of 2014.  The TCE earnings were positively impacted by more earning days.  The higher number of earning days in 2014 relates to Nordic Ruth’s long off-hire period in 2013 (6 months), counter-balanced by higher number of dry dockings in 2014, however, the TCE earnings were partially impacted by lower freight rates in the first 9 months compared to 2013.

Expenses relating to the operation of vessels in the first 3 quarters of 2014 increased 3.4% to USD 13.6 million (USD 13.1 million), of which USD 1.8 million (USD nil) was a one-off cost relating to the change of technical managers. 

EBITDA fell 32.3% to USD 2.6 million (USD 3.8 million) as a result of one-off costs relating to the change of technical managers amounting to USD 1.8 million (USD nil) and higher professional fees incurred, of which USD 0.3 million (USD nil) was related to the listing-prospectus following the restructuring in December 2013.

Depreciation amounted to USD 4.6 million (USD 4.8 million).

Net finance expenses were lower at USD 2.6 million (USD 5.4 million) as the loans were refinanced in December 2013 as part of the restructuring that was completed on 19 December 2013.

Cash flow generated from operations was USD 3.3 million (USD -2.2 million) mainly from the distributions earned by the respective pools, proceeds received from insurance claims for Nordic Ruth, offset by payment of periodic interest expenses on the working capital facility and term loan.  The Group invested USD 2.4 million in dry-dockings and made a partial repayment of USD 1.8 million on the working capital loan facility. 

Cash balance as at 30 September 2014 was USD 4.6 million (USD 3.1 million).

During the first 5 months of 2014, all the vessels were transferred to separate wholly-owned legal entities in Singapore as part of the restructuring.  At the same time, the change of technical managers for all the six vessels was also completed with Columbia Shipmanagement and Thome Ship Management managing three vessels each.

The handy tanker spot market rates for the first 9 months were lower than anticipated.  Hence, the average TCE rates earned by the vessels in the Handytankers pool were lower than the forecasted daily rate of USD 14,000.  For the same period, the LR1 spot market also performed lower than anticipated and hence below the forecasted daily TCE rate of USD 15,200.  However, during October and November both the handy tanker and the LR1 spot markets have experienced material improvement in the rates.

 

Although Q3 2014 was disappointing, the market has improved significantly in October and November for both the handy tanker and LR1 spot markets.  The pool operators now expects the average daily TCE rates for 2014 to be in line with Nordic Shipholding’s originally budgeted TCE rates.  The average daily TCE rates for 2014 is therefore expected to be USD 14,000 for handy tankers and USD 15,200 for LR1.  Despite the disappointing result for Q3 2014 the Board now expects revenue for 2014 as originally budgeted, but due to increased one-off costs the outlook published in the Interim Report H1 2014, is maintained.

For 2014, the Group expects EBITDA (earnings before interest, tax, depreciation and amortisation) to be in the range of USD 5.0 million – USD 8.0 million.  Barring further unforeseen circumstances, the result before tax is expected to be USD -5.0 million – USD -2.0 million.  The Group does not expect any write-downs of vessels’ carrying value unless significant weakness in the product tanker sector sets in.

The Group’s cash flows is expected to be USD -3.0 million – USD -1.0 million for 2014, after repaying the outstanding short-term working capital loan. 

The management has recently agreed main terms of a minimum 3-year time-charter fixture for Nordic Anne on a profitable basis.  The time-charter is expected to commence in early 2015.

The Board would also like to announce the resignation of a director, Mr Anil Kumar Gorthy with effect from 25 November 2014.  The board would like to thank Mr Gorthy for his contributions during his tenure with the Group.  PAG, the entity that manages the Company’s main shareholder, Nordic Maritime S.à.r.l, has informed the Board that it will nominate a new candidate to replace Mr Gorthy by the next Annual General Meeting in 2015.

The Board continues to source for suitable investment opportunities to grow the Company and seeks to maximise returns for shareholders.

 

 

For further information please contact:

Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S: +45 39 29 10 00


Attachments

NSH Quarterly financial announcement Q3 2014 (Final).pdf