Dry bulk shipping firm Golden Ocean reported third-quarter earnings below expectations and said charter rates remained too low to ensure profitability while vessel prices continued to sink.
Golden Ocean, part of shipping tycoon John Fredriksen’s business empire, said its quarterly figures were weighed down by poor Chinese coal demand while its bottom line also took a hit on one off charges related to charter contracts and new vessels.
Although charter rates improved in the fourth quarter so far, profitability remains too low and the firm is not signing long term contracts, keeping the “vast majority” of its vessels under spot contracts, awaiting better margins.
“It was well into the fourth quarter when the dry bulk market witnessed a decent recovery,” Golden Ocean said in a statement. “The effect on fourth quarter earnings will be limited, but it is expected that the net result will be slightly better than in the third quarter.”
The dry bulk market, already bruised by years of weak demand, took another hit this year as China cut coal imports and ran down stockpiles of bauxite even as iron ore demand remained in line with expectations.
“I expect further consolidation in dry bulk and we want to be consolidator number one”, Chief Executive officer Herman Billung told an investor presentation.
Golden Ocean, which is set to merge with Knightsbridge Shipping, another Fredriksen dry bulk shipping firm, said its third-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by nearly 80 percent to 7.2 million, underperforming expectations for $14.8 million..
The firm took one-off charges $15.7 million, pushing it to a net loss of $11.6 million for the quarter. (Reuters)