RSS Reports

3 Month Report 2010

Tue, 27 Apr 2010 14:52:00 GMT

President's views

During the first quarter, Concordia Maritime’s business activities continued to develop according to plan. Turnover amounted to SEK 107.3 (178.3) million and the result after tax was SEK 20.7 (–2.1) million.

Comments on the result
The tanker market during the first quarter was weak and, as expected, the upswing in December 2009 and January 2010 was temporary. In February, the freight rates in the product tanker market once again fell to about USD 7,000–8,000 per day. The freight rates on the time-charter markets increased somewhat.

The fact that Concordia Maritime currently has all its fleet signed to long-term charters means that despite this, we are doing well. The trend of the turnover and result during the first quarter was in line with our forecast.

Order of Suezmax tanker
During the period, an order for one new Suezmax tanker was placed with Samsung Heavy Industries in South Korea with delivery set for the second quarter of 2012. The investment amounts to just under SEK 500 million, the largest part of which will be paid on delivery. The intention is to employ the tanker in the open market.

This tanker, which will be named Stena Supreme, is part of a series of six units developed by Stena Bulk and designed by Stena Teknik. During its design, the focus was on energy efficiency. The vessel’s technical equipment and design will enable fuel consumption to be reduced by up to 10–15 percent compared with standard tonnage.

This order fits in very well with Concordia Maritime’s strategy and will be an interesting complement to our involvement in the product tanker market. The transport pattern for crude oil is changing, resulting in, among other things, longer transport distances. In this context, the Suezmax size is more flexible than e.g. VLCCs. We feel that the timing is right as the price is competitive and reflects the 35–40 percent drop in ship prices since their peak 1.5–2 years ago.

Participation in charter of Suezmax tanker
During the period, it was also decided that Concordia Maritime would participate with 50 percent of Stena Bulk’s charter of a newly built Suzemax tanker. This charter will run for 12 months following delivery from the shipyard, which is set for May this year. The freight rate is USD 23,000 per day. The tanker will be employed on the open market in the Stena Sonangol Suezmax Pool.

Future prospects
The large growth of the tanker fleet will probably result in a continuing weak market for some time. Even with an anticipated increase in scrapping, delayed deliveries and cancellations in 2010, the net growth of the fleet will be substantial.

The market situation is challenging, but we are in a good position. The whole product tanker fleet is signed to longterm charters, which means that we have secured our cash flows for some years to come. this, in combination with a strong financial position, means that we have the capacity for further investments if the right business opportunities arise.

Forecast for 2010
Our assessment is that in the financial year 2010, Concordia Maritime will reach a result before tax of approx. USD 9.5 million, corresponding to approx. SEK 70 million.

Final Accounts 2009

Tue, 23 Feb 2010 14:50:00 GMT

President’s views

During the fourth quarter, Concordia Maritime’s business activities continued to develop according to plan. Turnover amounted to SEK 111.2 (168.1) million and the result before tax was SEK 18.6 (28.9) million.

Comments on the result
During the quarter, the tanker markets continued to be very weak although they recovered somewhat in December. A general increase in demand together with the cold winter all over the world, resulting in declining stock levels, contributed to a higher demand for oil shipments. In part, this upswing should be seen as seasonal rather than a long-term sustainable improvement in the market.

When summarising the whole 2009, we can note that it was one of the weakest years for a very long time. The average freight rates on the open freight market fell to less than half the average in 2008. The time-charter market also weakened considerably, although not quite as much.

The fact that Concordia Maritime has all its fleet signed to long-term charters means that despite this, we are doing relatively well. The trend of the turnover and result for the full year is in line with our revised forecast. The result generated by our business operations has developed according to plan. However, the full result for the year is burdened partly by the capital loss on the sale of the shareholding in General Maritime and partly by the write-down of the holding in the fund Weavering Capital. With these nonrecurring cost items, charged to the result in an amount of approx. SEK 175 million, the result for the year is SEK -91.0 million before tax. This shows that despite weak or very weak markets, our position within long-term charters is generating a positive result from our operations.

Future prospects
Despite an anticipated increase in oil consumption as a result of a recovery in the economy, the large growth of the tanker fleet will probably result in a continuing weak market for some time. Even with an anticipated increase in scrapping, delayed deliveries and cancellations in 2010, the net growth of the fleet will be substantial.

The market situation is difficult, but we continue to feel that we are in a good position. The whole fleet is signed to long-term charters, which means that we have secured our cash flows for some years to come. This, in combination with an otherwise stable economy and a strong financial position, gives us the capacity to act swiftly when opportunities for new business deals arise.

Forecast for 2010
Our assessment is that in the financial year 2010, Concordia Maritime will reach a result before tax of USD 9.5 million, corresponding to approx. SEK 70 million.

9 Month Report 2009

Wed, 28 Oct 2009 14:30:00 GMT

President's views

During the third quarter, Concordia Maritime’s business activities continued to develop according to plan. The sale of all the company’s shares in General Maritime, which we announced in a press release on 28 August, negatively affected the result. Consequently, a revised forecast for the full year has been presented.

Comments on the result

During the third quarter, the tanker markets continued to be very weak. The freight rates on both the spot and the charter market continued to be low and showed no signs of improvement.

The fact that we have all our fleet signed to long-term charters means that, in the short term, we are less dependent on market trends. During the third quarter, the revenues from our contracts continued to be higher than those generated in the open market. The average freight rate for our fleet was about USD 20,000 per day, which can be compared with a freight rate of about USD 5,000 per day on the spot market and 3-year charter contracts currently generating approx. USD 12,000 per day.

In October, the two V-MAX tankers Stena Victory and Stena Vision were redelivered to General Maritime.

The company reports a return according to plan on its financial investments. However, the capital loss resulting from the sale of the shareholding in General Maritime has been charged to the income statement. (Read more about this on page 10.) On the positive side, the effect of our USD/SEK position amounts to SEK 193.8 million, which is reported in Other total comprehensive income.

Future prospects
Our assessment is that the market will remain weak for some time. One of the principal reasons for this is the very large growth of the fleet combined with overall lower oil extraction. Even if scrapping and order cancellations are expected to increase, the net growth of the fleet will still be substantial.

We have respect for the market situation, but we nevertheless feel that we are in a good position. The whole fleet is signed to long-term charters, which means that we have secured our cash flows for some years to come. This, in combination with an otherwise stable economy and a strong financial position, gives us the capacity to act swiftly if opportunities for new business deals arise.

Forecast for 2009
The company’s forecast for 2009 is a result before tax of SEK –100 million (SEK –2.10 per share). The forecast includes costs of a non-recurring nature amounting to USD –22.8 million (equivalent to SEK –179.3 million), which consist partly of the write-down of the holding in Weavering Capital and partly of the capital loss on the sale of the shares in General Maritime.

6 Month Report 2009

Wed, 12 Aug 2009 15:00:00 GMT

President's views

During the second quarter, our business activities developed according to plan. Total turnover during the second quarter amounted to SEK 162.5 (125.0) million with an EBITDA of SEK 44,0 (32,4) million.

Comments on the result

The tanker markets are currently very weak. However, due to all our vessels being signed to time charter contracts, our operating result is according to plan. During the second quarter, the revenues from our contracts were much higher than those generated in the open market.

In the first six months, we reached a total EBITDA of USD 11.4 million and posted an operating result of SEK 46.5 million.

The financial net for the second quarter, SEK 6.2 million, reflects lower loan costs due to lower interest rates. Our investments generated income according to plan and we report a positive effect of a USD/SEK currency position of SEK 8.2 million.

The total financial net for the first six months is SEK –21.1 million. However, as reported earlier, this figure includes the complete write-down of the value of the fund share in the British hedge fund company Weavering Capital totalling USD 3.6 million. During the period, no new information emerged and, consequently, it is felt that there is little chance of the company recouping its investment.

Events after the end of the period
In July, it was decided not exercise the option to extend the charters of the two V-MAX tankers Stena Victory and Stena Vision. This means that both tankers will be redelivered to their owner, General Maritime, at the end of the year.
The decision is not expected to affect the forecast for the full year.

Future prospects
After several years with, at times, record-high markets, we are now facing the prospect of sharp downturns. Our assessment is that we are now entering a period, probably
several years, of weak tanker markets. The market downturn, which has come as no surprise, is due to a combination of concurrent factors. The weak global economy, which has resulted in a lower demand for transport, is, of course, one contributory factor. But the most important factor is a tanker fleet that has grown, and is growing, too rapidly as a result of far too many new orders.

The trend of the market is a reminder of the importance of a long-term approach and of having a stable economy and a strong financial position. At Concordia Maritime, we have been planning for the current market situation for several years. The whole fleet is signed to long-term charters, which means that we have secured our cash flows for some years. This will enable us to act swiftly when opportunities for new business deals arise in a weak market.

Forecast for 2009
The result before tax for the financial year 2009 is expected to reach SEK 45 million, which is equivalent to SEK 0.94 per share.

3 Month Report 2009

Tue, 28 Apr 2009 14:45:00 GMT

President’s view

Our business activities are developing according to plan, with the exception of the damage to one of the Stena Victory’s reduction gears. Total sales during the period amounted to SEK 178.3 (132.7) million with an EBITDA of USD 5.9 (6.2) million

Comments on the result
The first quarter produced a small but positive result despite a weak market and a large write-down of the value of a fund. The time-charter contracts generated better than expected revenues and the vessels’ operating costs have so far been somewhat lower than forecast.

The lower result is mainly due to the write-down of the value of the fund share in the British hedge fund company Weavering Capital. On 31 December 2008, Concordia Maritime’s share in the fund amounted to USD 3.6 million.

Based on what Concordia Maritime has learned from the fund’s liquidator, it is felt that there is little chance of the company recouping the investment. The write-down of the whole investment in the fund has been charged to the result for the first quarter of 2009.

Despite the size of the write-down, it is important to emphasise that this does not affect the company’s financial position, nor does it affect the newbuilding program or our short-term and long-term capacity to act.

Future prospects
The market for the transport of oil and petroleum products weakened still further during the period. The main driving forces behind this include overall low freight volumes, limited arbitrage trade across the Atlantic and a larger number of vessels.

Several factors point to a continuing weak market for some time to come. This could enable us to use our stable cash flows and strong financial position to take advantage of opportunities for new business deals.

We are continuously working to minimise the company’s risk exposure, for example, to exchange rate fluctuations. As part of this work, we re-entered into a so-called equity hedge, which reduces the impact on equity of fluctuations in the USD/SEK exchange rate. We have also increased our interest rate hedging.

Changed forecast for 2009
As reported earlier, the write-down of the investment in Weavering Capital has resulted in a lowering of the forecast for 2009. The new forecast for 2009 is a result before tax of SEK 45 million, which is equivalent to SEK 0.94 per share (the previous forecast was a result of SEK 70 million equivalent to SEK 1.47 per share).

» Read the entire report here

Final accounts 2008

Tue, 17 Feb 2009 15:00:00 GMT

Our business activities during the fourth quarter proceeded according to plan. Sales totalled SEK 168.1 (117.9) million and the result before tax was SEK 40.0 (31.4) million

Comments on the result

Both sales and the profit trend are in line with the forecast for the full year. The increase in sales and operating result is mainly due to the delivery of the Stena Perros and new contracts signed for the Stena Vision and the Stena Victory.

The fact that we posted a good profit, despite the current market situation, is a consequence of our strategy to sign our vessels to long contracts. We have a fleet that is generating stable revenues, which are higher than the freight rates on the spot market.

Future prospects

The market trend in the short term is difficult to forecast. Several factors point to a weaker market. The major challenge is the large number of vessels under construction with delivery set for 2009 and 2010. Theoretically, this should have dampening effect on prices. To this should be added the generally weak economic climate, which has already begun to have an impact on freight rates.

However, it is impossible to predict how deep and protracted the downturn will be. A prolonged weak market in combination with a poorly functioning credit market could, paradoxically, have a positive effect on the balance between supply and demand. In this situation, shipping companies with poor cash flows and/or little access to financing could find themselves facing acute problems. This, in turn, could lead to delayed deliveries or even annulled orders resulting in a more balanced growth of the fleet.

In the more long-term perspective, I am firmly convinced that there will continue to be a large demand for safe transportation of oil as a consequence of rising energy requirements and the comprehensive utilisation of oil and petroleum products. At Concordia Maritime, we will use our stable cash flows and strong financial position to take advantage of opportunities created by the current market situation.

» Read the entire report here

9 month report 2008

Thu, 23 Oct 2008 15:01:00 GMT

President's View

Our business activities during the third quarter were stable and generated a profit and cash flow somewhat better than planned.

The operating result was SEK 22.6 million. This was our best quarter since the first quarter of 2005. Cash flow (EBITDA) after nine months is SEK 2.78 per share.
All the vessels in our fleet are signed to fixed time charter contracts and we have financing on favourable terms for the remainder of the newbuilding program. We thus have a stable platform and resources for new investments. This is especially important in these times of financial instability and nervousness in the financial markets.

The state of the financial market has now resulted in downward price adjustments for, in principle, all forms of financial investments. This also applies to our holdings, which are calculated at their market value on each accounting date and the effect included in the income statement.

At the end of the quarter, the value of our shareholding in Arlington Tankers had fallen about 25% compared with the beginning of the year and has since fallen a further 30%. This change in value is recorded directly to equity.

As mentioned in the previous interim report, the board of Arlington Tankers has proposed a merger with the US shipping company General Maritime. The companies have not yet made a final detailed proposal public. Shareholder meetings, which will vote on the proposal, will be held at the beginning of December at the earliest. We are continuing our evaluation of the proposed deal.

Even if the tanker markets so far do not seem to have been affected to any appreciable extent by the crisis in the financial markets, a general downturn in the so-called real economy will, of course, also affect this market in the form of lower demand.
A concrete example of the direct impact on shipping is that many shipping companies do not have the financing in place for their newbuilding orders and the lack of a functioning loan market could then result in difficulties in taking delivery of the vessels from the shipyards. This could provide business opportunities.

» Click here to read the complete report

6 Month Report 2008

Wed, 13 Aug 2008 08:15:00 GMT

President's View

With the first half of 2008 now behind us, I note that our business activities have by and large proceeded according to plan. Our product tanker fleet has generated revenues somewhat over expectations, despite at times a very weak freightmarket, thanks to our fixed contracts with guaranteed minimum freight rates. Operationally, our product tankers have also performed well.

Our net financial result continues to be positive. Financial investments have generated the return anticipated and, thanks to our conservative investment policy, the nervous financial markets have had a negligible impact on their value. Interest expenses continue to be low.

Our cash flow and result met expectations and the forecast for the full year remains unchanged, SEK 70 million. However, crew costs as well as operating and maintenance costs are a growing challenge. Costs in the first and second quarters were more or less at the same level, but salaries, spare parts and equipment are exposed to inflationary pressure. It is worth noting that Concordia Maritime is not affected by the high oil prices in the form of increased fuel costs. In time-charter contracts, it is customary that customers pay these costs.

3 Month Report 2008

Thu, 24 Apr 2008 14:00:00 GMT

President's View

During the period, the company’s activities proceeded smoothly and in line with expectations. All the vessels are signed to time charter contracts. These contracts generated higher revenues than in the open market for the third consecutive quarter. The product tanker segment generated an EBITDA*) of USD 7.0 (5.2) million in the first quarter.

The product tanker market continues to be weak, primarily due to a surplus of tonnage. The product tanker fleet is expected to continue to increase in size during the rest of 2008 as well as in 2009 and this will probably continue to exert downward pressure on freight rates. This market scenario has been anticipated by the company and was one of the main reasons for the company signing long-term contracts at an early stage.

The company’s large-tanker segment is proceeding according to plan and the vessels are performing well. As is the case in the product tanker segment, these vessels are signed to time-charter contracts. In the first quarter, the large-tanker segment generated an EBITDA of USD -0.4 (-2.8) million.

Final Accounts 2007

Tue, 19 Feb 2008 15:00:00 GMT

President’s views

The construction of the new fleet of P-MAX tankers proceeded fully according to plan in 2007. The P-MAX tanker Stena Perros, which is no. 6 in the series of ten vessels, was delivered at the beginning of December and directly entered its 5-year charter with TOTAL. The tanker was delivered two months earlier than originally planned.

Both shipbuilding prices and second-hand prices of product tanker tonnage continue to be high. The market value of the existing fleet is currently estimated by us to exceed its book value by at least USD 125 million.

The management and operation of the P-MAX tankers functioned smoothly during the year and generated a cash flow of USD 23.1.

It is worth pointing out that all of the company’s delivered vessels are signed to charters with a guaranteed minimum income. Some of the charters include profit-sharing clauses. Despite a weak market in the fourth quarter, with only minimum income related to profit sharing, an EBITDA 1 of USD 5.3 million was generated in the segment.

The weakening market in the fourth quarter shows little sign of improvement and the average freight rates in 2008 are expected to be below the rates in 2007.

In 2008, Concordia Maritime expects to generate an EBITDA *) of approx. USD 26 million for all the company's activities and a ewsult before tax of approx. USD 11 million.