The dry-bulk and tanker shipping group maintained its guidance for lower 2011 results as it posted earnings before interest and tax (EBIT) of $21.1 million in the three months to end-June, down from $86.5 million a year earlier.
The result missed an average estimate of $26.1 million in a Reuters poll of analysts whose EBIT forecasts ranged from $17.0 million to $50.0 million.
"The result was much better than expected in tankers and slightly weaker in bulkers," Nordea Markets said in a note to clients, adding that second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) was ahead of its estimate but below consensus.
"We believe the tanker market will recover a bit (this year)," Chief Executive Carsten Mortensen told Reuters. "Dry bulk continues to be somewhat challenging."
"We are in a traditional low cycle, and we have sailed rather satisfactorily through the first half of the year and now are in a low season for product tankers, and we think that will pick up a bit as the year progresses," Mortensen said.
Mortensen said that the Norden dry-bulk fleet's 94 percent contract coverage for this year means it is shielded from swings in the market.
"Expectations for the profit for the year remain unchanged," Norden said in its report, reiterating its guidance for 2011 EBITDA of $135 million to $175 million and EBIT between $55 million and $95 million.
Norden posted EBITDA of $239.6 million and EBIT of $222.5 million for 2010.
The dry-bulk market remained on a downward trend in the second quarter, with the Baltic Dry Index dropping 8 percent, taking the index's decrease to 20 percent for the first half, Norden said.
The product tanker market in the quarter was mainly driven by exports from the U.S. Gulf and strong demand in South America and Africa, the company said.
Norden's active fleet comprised 210 vessels at the end of the second quarter, in addition to which it had 40 vessels on order at shipyards, it said.
Norden said it was in a strong position to take advantage of future investment opportunities, with cash and securities of $498 million and undrawn credit facilities of $113 million at the end of the second quarter.
That compares with outstanding payments on its vessel building programme of $350 million falling due in 2011-2013, the company said.
"We still have a newbuilding programme, and our cash will be used to take advantage of the opportunities that a cyclical market offers, for example the four new tankers we have bought," Mortensen said.
"And it will be used to develop the business and reward shareholders -- we would very much like to make an acquisition, but we have nothing specific in our sights," he added. (Reuters)
